Washington, D.C. (March 9, 2017)—The Independent Community Bankers of America® (ICBA) today testified before Congress on the value of the Small Business Administration’s 7(a) loan program to local small-business lending. Cynthia Blankenship, vice chairman, chief financial officer and corporate president of Bank of the West in Grapevine, Texas, said the program allows community banks to provide credit to a broader range of borrowers and ensure sound underwriting.
“What sets community banks apart is their first-hand knowledge of the borrower, the community, and the local economy,” Blankenship told the House Small Business Subcommittee on Investigations, Oversight and Regulations. “The Small Business Administration’s 7(a) loan program allows community banks to leverage their unique underwriting skills to more effectively serve the small businesses in their communities.”
Blankenship said the SBA program allows community banks to serve small businesses that would not otherwise qualify for conventional credit, with loans fully substantiated and documented through the SBA’s “Credit Elsewhere Test.” She called on Congress to ensure the 7(a) program is not disrupted, noting that while it is fully funded by user fees—not taxpayer dollars—Congress must approve a program authorization level every year. More broadly, she advocated regulatory and tax relief for community banks under ICBA’s Plan for Prosperity platform, which would enable more community bank lending and localized economic growth.
Community banks are the most steadfast and preferred small-business lenders. During the financial crisis of 2008-09, community bank small-business lending increased amid a decline in lending by the nation’s largest banks. Separately, a study by seven Federal Reserve Banks found community banks had the highest lending and satisfaction scores among small-business borrowers—out-distancing credit unions, large banks and online lenders by a wide margin.
The Independent Community Bankers of America®, the nation’s voice for more than 5,800 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit ICBA’s website at www.icba.org.