House passes ICBA-backed legislation to protect SBA lending

The House of Representatives passed ICBA-backed legislation to protect the integrity of the Small Business Administration 7(a) program so it can continue to reach more borrowers and support local economic development.

Background: Introduced by Rep. Rob Bresnahan (R-Pa.), the Capping Excessive Awarding of SBLC Entrants (CEASE) Act (H.R. 2987) would limit the number of SBA-licensed for-profit small business lending companies to 16 to restore proper oversight capabilities to the SBA and protect the integrity of SBA loan programs.

ICBA Support: In a letter to members of Congress ahead of the vote, ICBA said community banks—as the nation’s leading small-business lenders—have a vested interest in the continued strength and integrity of the 7(a) lending program.

Timeline:

• ICBA in 2023 opposed the SBA’s lifting of the moratorium on new SBLCs that can lend under 7(a), saying the entrance of nonbank lenders risks higher defaults and incidences of fraud.

• When the cap was lifted over ICBA objections, three new SBLCs were licensed in addition to the 14 that were already operating. One immediately faltered, leaving a total of 16.

• ICBA said instead of issuing licenses to new SBLCs, Congress and the SBA should focus on maximizing the community bank partnerships that have expanded lending in underserved areas.