WASHINGTON—A final rule issued by the Small Business Administration (SBA) to amend SBA loan program regulations and to lift the moratorium on licensing new small business lending companies (SBLCs) will increase fraud risks and costs for lenders and small businesses, NAFCU is asserting.
The new rule adds a new type of entity, called a “Community Advantage SBLC,” and removes the requirement for a loan authorization in 7(a) and 504 loan programs.
“NAFCU is disappointed to see the SBA ignoring the concerns raised by our members and more than 100 other stakeholders in its final SBLC rule,” said NAFCU President and CEO Dan Berger. “Main Street small businesses rely on SBA-backed loans to launch and expand their operations, but allowing unregulated fintechs to participate in these programs heightens fraud risks – as evidenced by the alarming results of the paycheck protection program – and is likely to increase program costs, which will result in higher fees for both lenders and small business borrowers and could place the 7(a) and Microloan Programs at existential risk.
“NAFCU firmly believes that credit unions represent the best and safest financial option for Americans, and we will continue to advocate for the SBA to safeguard the integrity of its essential programs from fraud-prone fintechs.”
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