WASHINGTON—Bipartisan legislation has been introduced to increase the Small Business Administration's (SBA) oversight authority over its 7(a) loan program.
Credit unions actively participate in the program, which helps credit unions mitigate loan risk and maximize small-business lending within their statutory member business loan (MBL) cap, NAFCU noted.
Each credit union loan dollar backed by SBA is excluded from the credit union's MBL cap.
The bill, the Small Business 7(a) Lending Oversight and Reform Act, was introduced by Senate Small Business and Entrepreneurship Committee Chairman Jim Risch (R-ID), House Small Business Committee Chairman Steve Chabot (R-OH), and respective Ranking Members Jeanne Shaheen (D-NH) and Nydia Velázquez (D-NY), NAFCU reported.
The proposed legislation would:
- Strengthen SBA’s Office of Credit Risk Management by outlining in statute the responsibilities of the office and the requirements of its director
- Enhance SBA’s lender oversight review process, including increasing the office’s enforcement options
- Require SBA to detail its oversight budget and perform a full risk analysis of the program on an annual basis
- Strengthen SBA’s Credit Elsewhere Test by clarifying the factors that must be considered
NAFCU emphasized that it is engaged on this issue as the 7(a) loan program is critical to credit unions' ability to provide loans to small businesses and entrepreneurs in their communities.
In March of last year, a NAFCU witness testified before a House Small Business Committee on credit unions' participation in the SBA's 7(a) loan program and the value credit unions provide to the nation's small businesses.
At the association's 2017 Congressional Caucus in September, NAFCU President and CEO Dan Berger signed an agreement with SBA Administrator Linda McMahon intended to increase the number of credit unions offering SBA 7(a), 504 and Community Advantage loans to business members.