Under a proposed regulation, borrowers and lenders of loans backed by the SBA will have greater access to capital and less paperwork to deal with, the agency said today.

The SBA said Tuesday that its application process will be streamlined and oversight and the integrity of the agency's loan programs will be strengthened.

According to the SBA, the proposed changes are:

Eliminating the Personal Resource Test. A borrower will no longer be required to obtain a maximum level of personal finance resources for a 7(a) or 504 loan. This will streamline the loan process by eliminating complicated regulations used to determine the amount of collateral required

Revising the Rule on Affiliation. Revising this rule will open access to SBA loans to businesses that, under current rules, would not qualify as a small business under SBA's size standards by virtue of their association with other companies. It also would streamline 504 loan applications and reduce paperwork requirements for 504 and 7(a) loan applications.     

Eliminating the Nine-Month Rule for the 504 Loan Program. Eliminating the  rule removes a restriction that limits a business to include in its 504 project only expenses incurred nine months prior to submitting the loan application. The new rule would allow inclusion of expenses incurred at any time, including projects put on hold for more than nine months due to a natural disaster.

Increasing Accountability. Refocusing CDC corporate governance requirements will reinforce the importance of certified development companies' board of director accountability for CDC oversight for the 504 loan program and set in place measures to strengthen oversight in order to maintain program integrity.

The SBA said it proposed the new measures after extensive consultations with lenders and borrowers to identify the greatest challenges they face and find ways to reduce barriers to making and accessing loans, while still maintaining strict oversight.

The SBA has provided additional information on the proposed rules.