As part of its markup of its section of the Democratic budget reconciliation package, the Build Back Better Act, the House Small Business Committee late last week approved legislation that included a proposal to grant the Small Business Administration (SBA) new direct-lending abilities. Under the provisions in the bill, the SBA could make 7(a) loans of $150,000 or less directly to borrowers or “through partnerships with third parties”.
House Small Business Committee Chairwoman Nydia Velázquez (D-NY) and Senate Small Business Committee Chairman Ben Cardin (D-MD) have indicated that the intent of this proposal is to expand access to smaller dollar credit for small businesses, some of whom were missed in the initial phase of the paycheck protection program (PPP).
The “Build Back Better” package, still undergoing reconciliation process in Congress, would provide the SBA with nearly $4.5 billion to create this new program.
While the legislation leaves a lot of the details of the new program to SBA, the package includes provisions would allow SBA to originate and disburse direct loans under this program, should it choose to, or use financial institutions to offer the loans and allow them to collect fees and cover costs for helping distribute and offer the loans.
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