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In a letter to U.S. Small Business Administration (SBA) officials Tuesday, NAFCU raised its concerns over proposed changes by the SBA to the administration's 7(a) Loan Program and the 504 Loan Program. These changes, according to NAFCU, could result in an "uneven playing field between credit unions and fintechs."
The letter, written by NAFCU Regulatory Affairs Counsel James Akin, asked the SBA "to safeguard the 7(a) Loan Program by rescinding or pausing this rulemaking until its impact in relation to Small Business Lending Companies (SBLCs) is better understood."
Akin stated that NAFCU does applaud the efforts to streamline regulations to help support credit unions, as well as support certain portions of the proposed rule, particularly that it "reduces burdens and costs on credit union SBA lenders."
NAFCU's main concern appears to be about the timing of the proposed rule.
"On November 7, 2022, shortly after the SBA issued the Affiliation Proposed Rule, the SBA published a notice of proposed rulemaking to lift the moratorium on licensing new SBLCs and add a new type of entity called a Mission-Based SBLC (SBLC Proposed Rule)," the letter stated. "The rescission of the moratorium on the licensing of new SBLCs would allow non-depository institutions, including financial technology companies (fintechs) and other alternative lenders, to apply for a license to participate in the SBA's 7(a) Loan Program. The simultaneous loosening of lending requirements and opening 7(a) lending to underregulated, fraud-prone fintechs would represent a major shift in SBA lending, the impacts of which may be significant, and which have not been properly examined."
NAFCU urged the SBA to delay issuance of a final rule for either proposal until it has adequately considered the impacts of each rule upon the other, and the combined impact of both.
Comments on the SBA's proposed rule are due by Jan. 6, 2023.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
