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Following a hearing last month during which NAFCU witness Gail Jansen raised concerns about the Small Business Administration's (SBA) proposal to increase its 7(a) program loan fees, leaders of the House Small Business Committee have requested the Government Accountability Office (GAO) evaluate the SBA's fiscal year 2020 budget estimates for the loan program.

In its FY2020 budget, the SBA proposed an increase of 3.50 percent to the guaranty fee for loans in the range of $500,001 to $1,500,000 and 4 percent for loans greater than $1.5 million. Jansen in her testimony noted that such increases could have a severe impact on credit unions' ability to fund loans for small businesses in their communities.

House Small Business Committee Chairwoman Nydia Velázquez, D-N.Y., and Ranking Member Steve Chabot, R-Ohio, and Subcommittee on Economic Growth, Tax & Capital Access Chairman Andy Kim, D-N.J., and Ranking Member Kevin Hern, R-Okla., made the request for a budget evaluation earlier this week to GAO Comptroller General Gene Dodaro.

In their request, the lawmakers noted the SBA's argument that "without modifications to current law, it cannot achieve a zero-subsidy cost for the 7(a) program in FY2020." The SBA has estimated that since 2005 – except for a three-year period during the recovery from the Great Recession – the program would operate at a zero-subsidy cost.

The lawmakers justify their request by saying "it is unclear how macroeconomic assumptions or expected changes in borrower behavior enter into SBA's estimates. More generally, greater transparency is needed to determine whether SBA's estimates are reasonable."

NAFCU will continue to monitor this issue and advocate against any loan fee increases that could hinder credit unions' ability to serve their members.