[responsivevoice_button voice="US English Male" buttontext="Listen to this"]


Based on the resources required to supervise them, the SBA anticipates that it can add three new non-bank lenders to its lender network.

To give underserved small businesses more lending options, the Small Business Administration (SBA) has proposed a rule that would expand the number of non-bank lenders in its 7(a) loan program. According to Business Journals, the Biden administration and the Small Business Administration indicated in October that they wanted to reconsider lending participation. In May, SBA Administrator Isabel Guzman stated that the organization was contemplating incorporating Fintechs into its lending programs. Fintech representatives are among those who say the proposed rule will make it easier for small businesses, especially those in underserved areas, to get capital.

SBA’S U.S Office (Photo: Istock)

Attorneys and accountants say that businesses, especially small ones, are more interested in SBA loans and grants. On the other hand, some people in the banking industry are worried about making it easier for the fintech industry to get funding. The SBA 7(a) lending program is used by hundreds of banks, and in 2022, more than 1,500 banks gave out loans. However, the agency has restricted non-bank licenses since 1981 to 14 “small business lending companies” that provide 7(a) loans to the agency’s regulated entities. Nevertheless, the organization has been experimenting with expanding its lending options. The Community Advantage Pilot Program (CAPP) was established by the SBA in 2011 with the intention of providing smaller 7(a) loans to mission-driven lenders with an emphasis on economic development. This year, the pilot was extended to 2024. The SBA has previously utilized non-bank lenders. The Paycheck Protection Program (PPP) funds were distributed by the SBA with the assistance of non-bank lenders in the early days of the COVID-19 pandemic.

Joe Biden, Kamala Harris and Isabel Guzman, SBA Admin addressing SBA’s proposals (Photo: The Hill)

Based on the resources required to supervise them, the SBA anticipates that it can add three new non-bank lenders to its lender network. Since CAPP lenders are already a part of the SBA lending system, the agency stated that they would also be able to apply for the program and that it would not increase the number of lenders it would have to supervise. Lenders seeking SBA authorization for 7(a) and 504 loans have also been suggested to be exempt from the current loan authorization requirement by the agency. Currently, the terms and conditions under which the SBA will make or guarantee business loans will be specified in a loan authorization for both SBA loans. Under the agency’s proposed rule, it will use the terms and conditions of the loan application submitted by SBA lenders rather than its current procedure. Additionally, the agency is collaborating with HBCU sororities and fraternities to help close the wealth gap.


Share this post

Share on facebook
Share on linkedin
Share on pinterest
Share on print
Share on email
Share on telegram