Ranking Member Ernst Demands SBA Address Concerns on Irresponsible Changes to Lending Programs
SBA is currently considering rules that could make lending programs more vulnerable to fraud and abuse. Ernst and Cardin write: “Let us be clear, Congress has not authorized any loosening of prudent underwriting or affiliation standards.”
WASHINGTON – U.S. Senator Joni Ernst (R-Iowa), Ranking Member of the Senate Small Business Committee, and Committee Chairman Ben Cardin (D-Md.), are demanding the Small Business Administration (SBA) work with congressional committees and go back to the drawing board on the agency’s irresponsible changes made to its loan underwriting while permitting an unlimited number of non-bank financial technology companies, or “fintechs,” the very entities responsible for issuing billions of dollars-worth of Paycheck Protection Program (PPP) fraud, to participate as lenders.
In the letter, Ranking Member Ernst and Chairman Cardin write, “The proposed rules establish broad and sweeping changes that do not reflect congressional input or authorization. In particular, changes to the current underwriting standards have the potential to make the program vulnerable to predatory lending practices…
“The sweeping changes contained in these two rules would substantially overhaul SBA’s lending programs by permitting new program participants and changing the current guardrails of the programs, something that comes dangerously close to authorizing through the regulatory process…
“Let us be clear, Congress has not authorized any loosening of prudent underwriting or affiliation standards...
“We urge diligence and restraint from the agency. SBA must strongly consider prudent guardrails that can be demonstrated to be successful, before making changes that could impact the fiscal integrity of overall SBA lending programs. We urge the SBA to work closely with congressional committees. The SBA should address these concerns before publishing final rules.”
Recently, SBA proposed two rules: The Affiliation and Lending Criteria for the SBA Business Loan Programs, 87 FR 64724, and Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization, 87 FR 66963. These proposed rules would loosen key 7(a) program requirements and remove critical safeguards designed to prevent fraud and abuse.
Read the full letter here.
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