Snowe Introduces Bill Allowing Lenders to Provide 7(a) Funding Across State Lines
WASHINGTON - If passed, a new bill would allow credit unions and other lenders to provide the SBA's 7(a) loans beyond the districts where they propose to make the loans. Senator Olympia Snowe (R-Me.), who is also the Senate Small Business Committee Chairwoman, introduced the Small Business Lending Improvement Act on Aug. 1. The bill would allow CUs and other participants in the SBA's 7(a) loans program that have earned the "Preferred Lender" designation to fund loans in every state. Currently, preferred lenders must apply for licenses in each of the 71 SBA districts in which they wish to make 7(a) loans. Snowe's bill also aims to increase the maximum loan size to $3 million from $2 million and allow a company's net worth and income to be considered in determining whether it is small enough for the program. "This legislation will reform a cumbersome and duplicative lender licensing process to provide small businesses with a more efficient means of accessing the capital they must have to start and sustain their firms," Snowe said in a statement. An SBA spokesman said Snowe's proposal is "in line with what we're trying to do administratively." Earlier this summer, the Small Business Access to Capital Act of 2005 (H.R. 1868) bill introduced by Rep. Nydia Velazquez (D-N.Y.) had proposed reversing the 7(a) loan program's zero subsidy; increase the size of loans to $3 million; and reinstate an arrangement that combined an SBA-backed loan with a CU or bank loan in a single financing package, commonly referred to as "piggybacking."