Bill Introduced to Try and Block SBA’s Plans to Become a Direct Lender

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white houseIn case you missed it, the White House has called for the SBA to get into the direct lending business to “address gaps in access to small dollar lending.” The SBA has previously defined “small dollar lending” as loans under $150,000. Now the Biden administration wants it to compete in this segment against the private sector.

But a new bill introduced by two republican senators, called the Protecting Access to Credit for Small Businesses Act, says not so fast.

It literally says that its purpose is to “To prohibit the Administrator of the Small Business Administration from directly making loans under the 7(a) loan program, and for other purposes.”

“Fraud and inefficiency characterize the Small Business Administration’s history in direct lending,” said Senator John Kennedy in a statement. “The government shouldn’t crowd out private lenders that are already doing a good job getting funds to the small businesses that need them. I’m proud to partner with Sen. [Tim] Scott to stop the SBA from replacing private lenders and those in our communities with Washington bureaucrats.”

“When acting as a direct lender, the SBA has a consistent history of failure and inefficiency when compared to the private sector,” said Senator Scott. “The administration’s proposal is just a vehicle for a big government overreach into nearly all aspects of American life and private institutions. There’s simply no reason to use the federal government to funnel tax dollars that will later be loaned back to small businesses.”

Government agencies at all levels seem to be creeping into the small business lending game. Not only has the SBA recently upgraded its Lender Match online loan marketplace but the City of New York also recently launched its own business loan marketplace.

Last modified: March 21, 2024

Category: Business Lending

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