Senator Tim Scott introduced a bill on Tuesday to prevent the Small Business Administration from becoming a direct lender, the Protecting Access to Credit for Small Businesses Act (S. 3382). The bill would prevent the SBA from directly granting loans under the 7 (a) program.
“We support all efforts to prevent the SBA from becoming a direct lender and thank Senator Scott for this legislation,” said Jim Nussle, President and CEO of CUNA. “The current public-private partnership between the lenders and the SBA benefits everyone involved, helping to foster relationships between businesses and their community. Turning the SBA into a direct lender would negatively affect these relationships and disrupt the current system at a time when small businesses need access to capital more than ever.
CUNA wrote to Scott on Tuesday in support of the bill, noting that the SBA’s government-guaranteed loan programs embody a successful public-private partnership.
“This public-private partnership works because borrowers can get loans from financial institutions they know well and have a vested interest in the success of their borrowers. Additionally, when working with local lenders, small businesses are likely to benefit from the advice and experience of a lender with the goal of helping the borrowing business succeed, ”the letter said. “By becoming a direct lender to small businesses, the SBA is likely to harm the relationships of local financial institutions with businesses and potentially prevent those businesses from establishing important banking relationships that can only help their business survive and to prosper.
CUNA also supports a similar bill introduced in the House by Representative Blaine Luetkemeyer (R-Mo.).