WASHINGTON—The Small Business Administration has finalized changes to its 7(a) and 504 loan programs, changes CUNA believes will ultimately harm the borrowers the SBA intends to aid.
The final rule lifts the moratorium on the number of small business lending companies (SBLCs) and adds a new classification, “Community Advantage SBLC.”
AS CUToday.info reported earlier, CUNA’s view aligns with NAFCU, which also declared the rule is harmful.
CUNA said it is very concerned with the lack of regulatory requirements for SBLCs, particularly since they would be primarily regulated by the SBA’s Office of Credit Risk Management (OCRM).
“Lenders have reported the OCRM is operating at maximum capacity without additional supervisory responsibilities,” CUNA said.
Removes ‘Standards’
“This final rule removes long-standing, existing prudent lending standards we believe will unintentionally harm the minority and underserved communities it is trying to help,” said CUNA President/CEO Jim Nussle in a statement. “New lending entities would not face the same regulation credit unions and other community lenders are subject to, and the removal of these guardrails gives us serious concerns that the changes will not have the positive impact intended."
Loans made through the 7(a) program are guaranteed (up to 85%) by the federal government, and the guaranteed portion of the loans do not count against a credit union’s member business lending cap.
Feeling the FOMO Fever? CUToday.info Has a Prescription
Are you missing out on the latest news in credit unions? Missing the trends and developments you need to be aware of? We can help. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
And it’s free!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com