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Committee Republicans voice significant concerns with Democrat proposals to expand government direct lending

WASHINGTON, D.C. – Today, House Committee on Small Business Republicans, led by Ranking Member Blaine Luetkemeyer (MO-03), sent a letter to House Speaker Nancy Pelosi and Republican Leader Kevin McCarthy voicing significant concerns with Democrat proposals to expand federal government direct lending capabilities.

President Biden’s administration and Congressional Democrats have taken steps to move toward a fraud-ridden, cumbersome federal direct lending model. Committee Republicans are urging House Leadership to exercise extreme caution with any proposals that rely solely on the federal government to underwrite and disburse small business assistance.

Excerpts and the link to the full letter can be found below. 


"On August 4, 2021 the SBA introduced the PPP (Paycheck Protection Program) Direct Forgiveness Portal that provides an option for small businesses to work directly with the agency, rather than with their lender during the forgiveness process. Shortly after launching this portal, the SBA sent financial institutions participating in PPP a notice stating that lenders would be subjected to audits if they chose not to participate in the direct forgiveness platform.

"A month and half later, Democratic Members on the House Committee on Small Business pushed through, using the Budget Reconciliation Process, a new direct lending option under the SBA’s 7(a) Loan Program. Not only did Democrats set up this tool with haphazard legislative language, but they also funded it with $4.5 billion in taxpayer dollars.  

"The SBA’s most successful and efficient lending programs are assisted by the participation of private sector lenders.

"This proven public private partnership delivers capital resources to small businesses in a timely and responsible manner by harnessing the efficiencies of market competition, which cannot be equaled or achieved by the federal government. Trends toward a one lender federal government model should not proceed. 

"Unfortunately, the American taxpayer has already assumed the brunt of ill-suited direct lending approaches by the federal government.  Not only has the SBA’s EIDL program been plagued with delays and underwhelming communication efforts, but it has also been susceptible to fraudulent activity due to a lack of oversight controls. 

"Not surprisingly, the report also mentions the role of private sector lenders and how they have assisted with fraud protections within a program they are not party to. 

"While any illegal activity within a government program is unacceptable, a fraud rate of approximately 30 percent is a warning sign for proponents of federal direct lending. 

"Federal government programs must provide aid and resources in a responsible, efficient, and prudent manner.  Anything less is unacceptable."

The link to the full letter can be found HERE.

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