House bill would prevent SBA direct 7(a) lending

CUNA wrote in support of a bill Tuesday that would prevent the Small Business Administration (SBA) from directly making loans under the 7(a) loan program. Rep. Blaine Luetkemeyer (R-Mo.) introduced the bill, H.R. 6307.

Loans made through the 7(a) program are up to 85% guaranteed by the federal government, and the government-guaranteed portion of the loan does not count against a credit union’s member business lending cap.

“This public private partnership works as borrowers can obtain loans from financial institutions that they know well and that have vested interests in their borrowers’ success. Furthermore, when working with local lenders, small businesses are likely to benefit from guidance and experience from a lender with a stake in helping the borrowing business succeed,” the letter reads.

“By becoming a direct lender to small businesses, the SBA is likely to harm local financial institutions’ relationships with businesses and possibly hamper these businesses from establishing important banking relationships that can only help their business survive and flourish,” it adds.

 

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