Influencing policy: Protecting community bank small business lending
ICBA Expert Contact
Overview
Community banks have long served as trusted partners for small businesses by providing relationship-based credit and financial guidance that supports local economic growth. ICBA advocates for policies that preserve and strengthen this role while ensuring government programs complement, rather than compete with, private-sector lending.
ICBA supports SBA loan programs and federal policies that promote a vibrant small business sector. At the same time, ICBA opposes proposals that would weaken the successful public-private partnership model of SBA lending, increase regulatory burden, or create unfair competitive advantages for entities operating outside the traditional banking regulatory framework.
ICBA Policy Priorities
Support effective SBA loan programs that expand responsible access to credit.
Oppose creation of an SBA 7(a) direct lending program.
Oppose expanded SBA 7(a) participation by additional unregulated, non-depository fintech lenders.
Oppose increases in SBA 7(a) program fees.
Advocate for repeal of Section 1071 of the Dodd-Frank Act or exemptions for community banks if repeal is not achieved.
Oppose the application of consumer-style regulatory frameworks to commercial and small business lending
Promote oversight and accountability regarding SBA lending activities conducted by nonbank lenders.
Strengthen coalitions and partnerships that advance community bank small business lending priorities.
Advocacy Impact & Progress
ICBA continues to engage lawmakers, regulators, and the SBA on policies affecting small business lending. Advocacy efforts emphasize the value of relationship-based lending, the effectiveness of existing SBA public-private partnerships, and the need for balanced regulation that promotes access to credit while preserving community bank participation. ICBA regularly submits comment letters, participates in policy discussions, and works with coalition partners to advance community bank priorities.
Get Involved
Community banker engagement is essential to advancing sound small business lending policies. ICBA encourages bankers to review advocacy resources, participate in grassroots campaigns, engage elected officials, and share their experiences with policymakers and regulators.
Policy Position and Background Information
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ICBA promotes Small Business Administration loan programs and federal policies that foster a vibrant small business sector.
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ICBA opposes SBA proposals to open SBA 7(a) participation to additional Fintechs and other unregulated, non-depository institutions. Institutions.
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ICBA opposes proposals to create an SBA 7(a) direct lending program.
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ICBA opposes proposals to raise SBA 7(a) program fees.
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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.
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ICBA opposes efforts to impose consumer-like regulations on small business loans.
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ICBA continues to enhance its small business sector relationships and coalition building.
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 open SBA 7(a) participation to additional Fintechs and other unregulated, non-depository institutions. These nondepository lending institutions would be licensed, supervised, and examined by SBA, a government agency that does not have the appropriate resources to ensure that fintech lenders operate in a safe and sound manner.
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.
Fair Lending
ICBA strongly supports equal access to credit through the fair lending laws – the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) – and condemns discrimination based on race, ethnicity, national origin, sex, religion, or other listed classification.
National Flood Insurance Program
ICBA strongly supports a long-term reauthorization of the National Flood Insurance Program (NFIP), which continues to provide critical support to community banks by providing affordable, reliable flood insurance for both residential and commercial properties securing both consumer and business loans.
Small Business Loan Application Data Collection
As relationship bankers, community banks look at each small-business loan individually and often in customized terms based on many factors. Rigid data collection requirements under Section 1071 of the Dodd-Frank Act would hamper the ability of community banks to tailor loans to meet the unique needs of local businesses.