After the Senate passed legislation earlier this month that boosts the Small Business Administration’s lending authority, President Donald Trump signed that legislation into law Thursday, an action that got a nod of approval from the Consumer Bankers Association.
The bill increases the SBA’s authority over the SBA 7(a) loan, which stands as the most common type of loan that is extended. The loans top out at $5 million, and typically are used for working capital, or real estate or equipment purchasing or debt refinancing.
In a statement e-mailed to PYMNTS, Richard Hunt, the CEO of the Consumer Bankers Association, offered support of Trump’s signing the legislation into law. He said “CBA members are dedicated to assisting small business owners across the country and, of the 100 most active SBA 7(a) lenders, make the majority of these important loans.
“This new law ensures banks can continue providing businesses on Main Street the resources necessary to grow local economies and create jobs,” the CBA stated.
The House of Representatives had approved the legislation in May.
In May, statistics showed that smaller firms sought fewer loans at the end of last year than had been seen in previous periods. The tally in the latest data shows that about 40 percent of companies sought funding. That’s off 45 percent from last year. One source of recourse before seeking loans: SMB executives used internal assets to fund operations.
In past coverage of the issue, Banker & Tradesman said the act would strengthen credit risk management, enhance oversight review and mandate annual risk analysis. There also would be a more transparent explanation of the factors that are part and parcel of the “credit elsewhere” test that are conducted before firms apply for financing.