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NAFCU supports benefits of SBA’s 7(a) loan program to house panel

WASHINGTON, DC (May 17, 2017) — National Association of Federally-Insured Credit Unions (NAFCU) Vice President of Legislative Affairs Brad Thaler touted the Small Business Administration’s 7(a) loan program in a letter today to the House Small Business Committee, which holds a hearing tomorrow on the program. Writing committee Chairman Steve Chabot, R-Ohio, and Ranking Member Nydia Velázquez, D-N.Y., Thaler reiterated support for past legislation by Velázquez to exclude any SBA loan (guaranteed and nonguaranteed portions) from the meaning of “member business loan” of a credit union.

“If Congress and the SBA were to make it easier for credit unions to participate in [the SBA’s] programs, small businesses throughout the nation would have greater access to capital at a time when it is greatly needed,” Thaler wrote. “We urge Congress and the SBA to take the necessary steps to enhance credit union participation in the 7(a) program.”

In March, NAFCU witness Sonya McDonald, executive vice president and chief lending officer at Randolph-Brooks Federal Credit Union, testified before a House Small Business subcommittee on the SBA’s 7(a) loan program. She noted that further participation in the SBA’s 7(a) loan program would allow more credit unions to offer these kinds of loans and increase the number of small businesses in their communities.

In 2015, NAFCU signed a three-year memorandum of understanding with the SBA aimed at getting more credit unions to increase their lending to member small businesses through SBA micro loan programs.

Below please find the full text of the letter:

May 16, 2017

The Honorable Steve Chabot                        The Honorable Nydia Velázquez
Chairman                                                       Ranking Member
Small Business Committee                            Small Business Committee
U.S. House of Representatives                      U.S. House of Representatives
Washington, D.C. 20515                                 Washington, D.C. 20515

Re:  Tomorrow’s Hearing to Review the SBA’s 7(a) Loan Program

Dear Chairman Chabot and Ranking Member Velázquez:

On behalf of the National Association of Federally-Insured Credit Unions, the only trade association exclusively representing the federal interests of our nation’s federally-insured credit unions, I write in conjunction with tomorrow’s hearing to review the Small Business Administration’s (SBA) 7(a) loan program.  NAFCU and our members appreciate the opportunity to share with you the importance of the 7(a) loan program to credit unions and look forward to working with you to find ways to encourage more credit unions to get involved.

Our nation’s small businesses represent 99.7 percent of all employer firms, employ nearly half of all private sector employees, pay more than 40 percent of total U.S. private sector payroll, and have generated over 60 percent of net new jobs annually over the last decade.  It is inarguable that the strength of the economy directly correlates to the health and well-being of America’s small businesses.  Many small business owners are members of credit unions and rely on their services to help their businesses succeed.  Any additional avenue for credit unions to help small businesses is beneficial to their members and to the communities they serve.  SBA’s 7(a) loan program has enabled credit unions to help entrepreneurs who would otherwise be unable to find funding.

As NAFCU testified to the Committee earlier this year, one way that Congress could help improve the 7(a) lending program would be to reintroduce the Credit Union Small Business Lending Act, which was first introduced by Ranking Member Nydia Velázquez in the 110th Congress.  The bill would amend the Federal Credit Union Act to exclude any SBA loan (guaranteed and non-guaranteed portions) from the meaning of “member business loan” of a credit union.  These loans would thereby be exempted from the arbitrary credit union member business lending cap.  The number of federally-insured credit unions participating in SBA programs has been steadily increasing since the SBA opened up its programs to more credit unions in 2003, and enacting legislation such as the Credit Union Small Business Lending Act will help this trend continue.

Additionally, issuing, improving, and adhering to guidance or published “best practices” would go a long way in helping credit unions get more involved in SBA lending programs.  Compliance with any regulation requires diligence, but clear guidance is necessary for a credit union to know they are doing what is required of them.  NAFCU members have reported that requests for clarification do not always result in a definitive answer.  Many times, SBA’s response is merely a screenshot of the page of the standard operating procedure (SOP) in question.  Furthermore, when loans are submitted through General Processing, some of SBA’s processors deviate from SOP requirements.  Shortening the length of time it takes to have a loan approved, which can take 8 weeks or longer, as well as something as simple as improving the user friendliness of the “SBA One” software, are other ways to encourage credit unions to offer SBA products.

If Congress and the SBA were to make it easier for credit unions to participate in these programs, small businesses throughout the nation would have greater access to capital at a time when it is greatly needed.  We urge Congress and the SBA to take the necessary steps to enhance credit union participation in the 7(a) program.

Thank you for holding this important hearing. We look forward to continuing to work with you on this and other issues of importance to credit unions.  If my colleagues or I can be of assistance to you, or if you have any questions, please feel free to contact me or NAFCU’s Senior Associate Director of Legislative Affairs, Chad Adams, at (703) 842-2265 or cadams@nafcu.org.

Sincerely,

Brad Thaler

Vice President of Legislative Affairs

cc:       Members of the Committee on Small Business


About NAFCU

The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to www.nafcu.org or @NAFCU on Twitter.

Contacts

Molly Safreed, msafreed@nafcu.org (NAFCU)

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