Press Releases

Luetkemeyer introduces legislation prohibiting direct lending under SBA 7(a) loan program

WASHINGTON, D.C. – Today, House Committee on Small Business Ranking Member Blaine Luetkemeyer introduced legislation to prohibit the Small Business Administration (SBA) from directly making loans under the 7(a) loan program. All Committee Republicans cosponsored this legislation.

This legislation would prohibit the SBA Administrator from directly making loans under the 7(a) loan program. The Democrats continue to push for massive government expansion, including the direct lending option under the 7(a) loan program. This is foreshadowing a movement away from private sector lenders having a role within these programs toward a sole government lending option. 

This is troublesome as the private sector delivers specific efficiencies through competition that the government cannot. Additionally, private sector lenders provide robust protections against fraudulent activity due to numerous federal financial rules and regulations. The government should not be in the business of making direct loans.

"It is clear the SBA should not be in the business of direct lending given their astronomical levels of rampant fraud and abuse at the expense of the American taxpayer," said Ranking Member Luetkemeyer. "The 7(a) program is a valuable tool for small businesses, and it is our duty to protect the integrity this program. Any attempt to expand the SBA’s direct lending capabilities recklessly drives out private sector competition and limits the specific efficiencies that only the private sector lenders can provide. This is yet another example of the Democrats' massive federal government power grab, and it must be stopped."

Additional background:

On Wednesday, November 17, 2021, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Credit Union National Association, Independent Community Bankers of America, and National Association of Federally Insured Credit Unions sent a joint trades letter opposing the SBA's expansion of direct lending. 

Read the full letter here.

The link to the bill text can be found here.