NAFCU ‘Urges’ SBA to Delay Loan Program Rulemaking
Concerns are raised over SBA’s proposed changes to the 7(a) and 504 Loan Program.
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.