ABA Disappointed in SBA Decision to Lift 7(a) Lender Moratorium

“ABA strongly supports the mission of the Small Business Administration’s 7(a) Program to encourage lenders to provide loans to underserved small businesses. Banks of all sizes have played a significant role in helping the program exceed its lending goals year after year. Given the success of the current program, we are disappointed with the SBA’s decision to lift the moratorium on the number of nondepository lenders in the 7(a) Program without ensuring that those new participants will have to meet the same high regulatory compliance and underwriting requirements as banks. It’s also not clear that SBA has the staff and resources to supervise these new lenders. 

“Unlike banks, new fintech entrants to the program are not subject to federal prudential supervision, and are not required to comply with Bank Secrecy Act and Anti-Money Laundering rules, safety and soundness requirements, stress testing, and other regulations that promote prudent lending. We urge Congress to closely examine SBA’s decision, particularly in light of recent reports that found limited SBA oversight of nondepository lenders in the agency’s existing programs and significant fraud linked to loans originated by fintech firms during the SBA’s Paycheck Protection Program.”