Small Business Lending

Position

• ICBA promotes Small Business Administration loan programs and federal policies that foster a vibrant small business sector.
• ICBA opposes SBA proposals to open SBA 7(a) participation to Fintechs and other unregulated, non-depository institutions by removing the moratorium on the formation of new Small Business Lending Companies (SBLCs) including mission based SBLCs. ICBA opposes proposals to create an SBA 7(a) direct lending program.
• ICBA opposes proposals to raise SBA 7(a) program fees.
• Congress should repeal Section 1071 of the Dodd-Frank Act which requires new data reporting on small business loan applications. If repeal is not possible, the CFPB should exempt community banks under proposed regulations required by statute. Additionally, the CFPB should not use its authority to impose requirements beyond those mandated by statute. (See separate resolution titled “CFPB Small Business Loan Data Collection Rule.”)
• ICBA opposes efforts to impose consumer-like regulations on small business loans.
• ICBA continues to enhance its small business sector relationships and coalition building.

Background

SBA Direct Lending & SBLCs. ICBA opposes proposals to create an SBA 7(a) direct lending program. Such a program could undermine the existing successful public-private partnership SBA loan programs.

SBA direct lending is a poor and costly alternative to private sector lending and would reach fewer borrowers. Today, there is a strong network of community banks, Community Development Financial Institutions, and other lenders already in place to meet demand for small business borrowers. Further, the SBA has a poor track record in direct lending.

ICBA also opposes proposals to rescind the moratorium on the creation of new small business lending companies (SBLCs) including mission based SBLCs. These nondepository lending institutions are licensed, supervised, and examined by SBA, a government agency that does not have the appropriate resources to ensure that SBLCs operate in a safe and sound manner.

Paycheck Protection Program. Paycheck Protection Program lending data continue to demonstrate that community banks are justifiably recognized as leaders of the financial response to the COVID-19 pandemic. Community banks made 60 percent of all PPP loans—including 72 percent of PPP loans to minority businesses.

ICBA will continue to support policies that ensure community banks can continue to effectively serve both American consumers and small businesses in urban, suburban, and rural communities as they grapple with these historic challenges. ICBA encourages SBA and accountability agencies within the government to investigate the rampant losses observed by SBA through lending by non-bank fintech firms.