The Small Business Administration is finalizing a final rule that would expand its popular 7 loan lender network to include several additional nonbank lenders this year.that it was working on the rule internally right now and was aiming to expand its distribution network responsibly. The agency first published the proposed rule in November and“We will hopefully in the coming weeks finalize internally and probably in the coming months a final rule would be published.
In 2020, the SBA also allowed nonbank lenders to participate in the popular Paycheck Protection Program, expanding the lending pool by thousands as part of an effort to reach underserved businesses that did not have an existing banking relationship. Ultimately, the PPP made 11.3 million forgivable loans over 2020 and 2021. In 2021, the SBA posted a record $44.8 billion in lending in the 2021 fiscal year across 61,000 loans from its 7 and 504 lending programs.
The group suggested mission-based lenders already in the Community Advantage Program be prioritized, and that the SBA look at the entirety of a lender's loan application portfolio to ensure it upholds the principles of good lending to small businesses, including interest rates on loans. It suggested using requirements such as whether the lender was publicly traded, its years of operations and its historical loan performance for non-SBA guaranteed commercial loans to make decisions on whether to add a lender to its 7 network.
“While intended to increase small-business lending in underserved markets, this is one idea that sounds good in theory but will negatively impact all U.S. small businesses,” Hurn said in a comment on the rule. Instead, Hurn said the SBA should rely less on the automation and algorithms that power many fintech lenders and instead offer higher loan guarantees on loans under $250,000, reduce paperwork, underwriting and collateral requirements in order to drive more lending to small-business owners.
France Dernières Nouvelles, France Actualités
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