ICBA backs bill to bar SBA 7(a) direct lending

ICBA expressed strong support for legislation that would prohibit the Small Business Administration from making direct loans under the 7(a) program.

Bill Details: Introduced by Senate Banking Committee Ranking Member Tim Scott (R-S.C.), the Protecting Access to Credit for Small Businesses Act targets a provision from President Joe Biden’s fiscal 2025 budget proposal to authorize 7(a) direct lending.

Hearing Today: Scott introduced the bill ahead of a Senate Small Business Committee hearing on the budget proposal scheduled for 2:30 p.m. (Eastern time) today. SBA Administrator Isabella Casillas Guzman is scheduled to testify.

ICBA Letter: In a letter to Scott, ICBA said SBA direct lending is a poor and costly alternative to private-sector lending and would reach fewer borrowers. In fact, the Congressional Research Service found that the SBA’s last direct lending effort in the 1990s had subsidy rates that were 10 to 15 times higher than those of its loan guarantee program, ICBA said.

Background: ICBA has repeatedly pushed back against proposals to fund SBA 7(a) direct lending, including speaking out in congressional testimony during the last Congress and publicly opposing efforts to provide funds via past budget-reconciliation bills.

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