ARLINGTON, Va. — NAFCU said while it supports the Small Business Administration's efforts to improve oversight of the agency's guaranteed loan portfolio, it is concerned about the lack of transparency regarding key aspects of the SBA Lender Risk Rating System.

At issue is SBA's proposal to incorporate its lender oversight program into federal regulation in order to provide for more coordinated and effective oversight of financial institutions that originate and manage SBA-guaranteed loans. Specifically, the proposed rule would codify in the agency's regulations SBA's process of risk-based oversight including accounting and reporting requirements, off-site reviews and monitoring, on-site reviews and examinations, and capital adequacy requirements.

In a Jan. 29 letter to SBA, Dan Berger, senior vice president of government affairs at NAFCU, wrote the agency's proposal had added a group of regulations that are applicable to "SBA supervised lenders"–a new category consisting of small business lending companies and non-federally regulated lenders. SBA-supervised lender regulations would cover internal controls, record retention, accounting and reporting, and capital adequacy for SBLCs and NFRLs, which NAFCU "strongly supports," Berger wrote.