Under a proposed regulation, borrowers and lenders of loansbacked by the SBA will have greater access to capital and lesspaperwork to deal with, the agency said today.

The SBA said Tuesday that its application process will bestreamlined and oversight and the integrity of the agency's loanprograms will be strengthened.

According to the SBA, the proposed changes are:

Eliminating the Personal Resource Test. A borrower will nolonger be required to obtain a maximum level of personal financeresources for a 7(a) or 504 loan. This will streamline the loanprocess by eliminating complicated regulations used to determinethe amount of collateral required

Revising the Rule on Affiliation. Revising this rule will openaccess to SBA loans to businesses that, under current rules, wouldnot qualify as a small business under SBA's size standards byvirtue of their association with other companies. It also wouldstreamline 504 loan applications and reduce paperwork requirementsfor 504 and 7(a) loanapplications.

Eliminating the Nine-Month Rule for the 504 Loan Program.Eliminating the rule removes a restriction that limits abusiness to include in its 504 project only expenses incurred ninemonths prior to submitting the loan application. The new rule wouldallow inclusion of expenses incurred at any time, includingprojects put on hold for more than nine months due to a naturaldisaster.

Increasing Accountability. Refocusing CDC corporate governancerequirements will reinforce the importance of certified developmentcompanies' board of director accountability for CDC oversight forthe 504 loan program and set in place measures to strengthenoversight in order to maintain program integrity.

The SBA said it proposed the new measures after extensiveconsultations with lenders and borrowers to identify the greatestchallenges they face and find ways to reduce barriers to making andaccessing loans, while still maintaining strict oversight.

The SBA has provided additional information on the proposed rules.