Berger: SBA Direct Loan Proposal Could Discourage CU Lending

A proposed Small Business Administration direct loan program could discourage credit unions from participating in other SBA programs, B. Dan Berger, president of the National Association of Federally-Insured Credit Unions warned Thursday.

“An SBA direct lending program could serve to reduce the level of lending partners at a time when business lending is greatly needed,” Berger warned in a letter to SBA Administrator Isabella Casillas Guzman.

Berger said that in recent years, NAFCU has worked to increase the number of credit union SBA lenders despite statutory limitations on credit union small business lending.

He said that credit unions that had not been SBA lenders have expressed interest in agency programs after they participated in the pandemic-related Paycheck Protection Program. “The SBA should focus on continuing to strengthen and expand its credit union partner base instead of diverting resources toward a new, potentially risky direct lending program,” Berger wrote.

The Biden Administration has proposed a $4.5 billion SBA loan program as part of its social spending increases. The intention is to fill gaps in lending markets to ensure that underrepresented entrepreneurs have access to capital.

The proposal was included in the House Small Business Committee’s budget reconciliation package. However, 15 Republican senators expressed opposition to the program last week,  

In his letter, Berger noted that the SBA has not made direct loans since 1998.

Related:

GOP Senators: SBA Shouldn’t Make Direct Loans; IG Alleges Waste

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