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Joint Trades Letter to Small Business Administration: SBLC Proposed Rule
Dear Senator Cardin, Senator Paul, Representative Velázquez, and Representative Luetkemeyer:
As the leading organizations representing virtually all of the thousands of lenders participating in the U.S. Small Business Administration (SBA) 7(a) loan program, we write to make you aware of our serious concerns regarding SBA’s recently released Proposed Rules: Affiliation and Lending Criteria for the SBA Business Loan Programs, 87 FR 64724 (“Affiliation Proposed Rule”) and Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization, 87 FR 66963 (“SBLC Proposed Rule”).
In the SBLC Proposed Rule, SBA proposes to lift the moratorium on the number of non-federally regulated institutions (called Small Business Lending Companies or SBLCs) that can make loans under the 7(a) program and to create a new type of SBLC called “Mission-Based SBLCs.” SBA indicates that the purpose for removing the moratorium for all types of SBLCs would be to fill a capital market gap for underserved markets identified by SBA. In the Affiliation Proposed Rule, SBA proposes to loosen or remove the 7(a) program’s requirements for how lenders underwrite loans and how borrowers may use loan funds.