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Jansen urges Congress to avoid higher SBA loan fees
NAFCU witness Gail Jansen, vice president of business services and operations at Kinecta Federal Credit Union, told members of a House Small Business subcommittee "we support examining every available option to avoid the fee increases, not passing them on to the small businesses or to the small lenders" at a hearing to examine proposed SBA 7(a) loan fee increases included in the agency’s Fiscal Year 2020 budget request.
Jansen urged the SBA and Congress to work together to protect and strengthen the program and preserve a credit union's access to capital by not raising fees on small lenders and small businesses.
Jansen noted that the SBA proposed increase of 3.50 percent to the guaranty fee for loans in the range of $500,001 to $1,500,000 and 4.0 percent for loans greater than $1.5 million could have a severe impact on a credit union’s ability to fund loans for small businesses in their communities.
"In high-cost real estate markets, such as California, New York, and Washington, D.C., among others, $1.5 million is not a lot when talking about commercial real estate. Increasing the cost of these loans to both the small business and the lending institution will likely make it more difficult to get an SBA loan for commercial real estate in higher-cost markets," Jansen said.
Jansen used a credit union member as an example to stress that as an SBA Preferred Lender, members turn to Kinecta for SBA loans to gain the necessary capital to grow their businesses. Through an SBA loan, a growing residential home remodeling company refinanced its business debt and created a substantial savings that led to more jobs being created.
In response to a question from Chairman Andy Kim, D-NJ., on how borrowers are reacting to the proposed 7(a) changes, Jansen replied that "Most of the borrowers who we deal with don't understand an SBA loan, so when they come in there is an education process … they come to us and they trust that we are going to guide them in the right direction."
For more on the SBA's signature lending program and the rule-based loan origination platform SBA One, sign up for NAFCU's upcoming April 16 webinar.