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NAFCU Vice President of Legislative Affairs Brad Thaler Tuesday sent letters to the House Small Business Committee and the Senate Small Business and Entrepreneurship Committee ahead of their hearings today with SBA Administrator Isabella Guzman covering the Administration’s budget proposal and oversight of the agency.

In the letters, Thaler shared NAFCU’s thoughts on the Administration’s FY 2023 SBA budget proposal.  He noted that while NAFCU is supportive of fully funding the SBA and shares its goal of strengthening Main Street small businesses, the association does not support efforts to grant the SBA additional direct lending authority. NAFCU has adamantly advocated against a proposal to expand SBA direct lending that was initially included in the Democratic budget reconciliation package that died in the Senate late last year.

Citing issues with direct lending, including the SBA’s historically higher rates of fraud and defaults, Thaler wrote that problems with the proposal have “even reached the SBA’s Office of Inspector General (OIG), who included concerns with direct lending in their report to the Committee earlier this year.”

Thaler noted that NAFCU and its credit union members wholeheartedly recognize and support the need to expand access to small-dollar business loans and have done their due diligence to increase the number of SBA lending partners, despite statutory limitations imposed on credit union’s ability to provide small business loans.

“Early in the pandemic, 70 percent of NAFCU members that were not already involved in SBA lending but did participate in the Paycheck Protection Program (PPP) expressed an interest in becoming a regular SBA lender,” added Thaler.

The association does, however, support other means to bolster small business lending through legislation such as the NAFCU-backed Member Business Loan Expansion Act, which would make it easier for credit unions to offer smaller business loans under $100,000 by ensuring these loans do not count toward the arbitrary credit union member business lending (MBL) cap. NAFCU also supports the Protecting Access to Credit for Small Businesses Act, which prohibits the SBA from having explicit direct lending authority.

“NAFCU believes that there are better ways to encourage the SBA to work with existing lenders to address the stated need of access to smaller loans to small businesses and we stand ready to work with you to achieve that goal,” concluded Thaler. 

Read Thaler’s letter to the Senate and House. NAFCU remains engaged with the SBA and Congressional leaders to voice credit union feedback on the administration’s small business oversight and stop the direct lending proposal.