SBA can address barriers affecting credit unions
Prioritizing reducing barriers to credit union participation in Small Business Administration (SBA) lending would be a “game-changer” for small businesses and credit unions, America’s Credit Unions President/CEO Jim Nussle wrote to the House Small Business Committee. The committee will conduct a hearing Tuesday on the role of SBA lending in supporting Main Street.
“One of the most pressing challenges facing credit unions in expanding their role in SBA programs is the complexity of program requirements,” Nussle wrote. “While credit unions are eager to grow their SBA loan portfolios, many report that the administrative burden, lack of internal expertise, and high costs associated with participation remain significant barriers.”
The letter details specific steps the SBA can take to address these concerns and also emphasizes the importance of safeguarding programs from fintech risks.
“While fintechs have demonstrated an ability to leverage technology to reach new markets, their participation in SBA initiatives has raised serious concerns about program integrity,” Nussle said, while credit unions “bring a track record of prudent lending and robust compliance frameworks.”
The SBA should adopt stringent safeguards for fintech participation in its programs, including enhanced initial vetting, continuous monitoring, and requirements for compliance with the same regulatory standards that are applied to depository institutions.
America’s Credit Unions also:
- Reiterated its opposition to the SBA becoming a direct lender, instead calling on the agency to “strengthen its partnerships with community-based lenders like credit unions.”
- Recommended that the SBA has full funding to support its lending programs, including the Economic Injury Disaster Loan program and other disaster loans;
- Encouraged Congress to advance the bipartisan Veterans Member Business Loan Act (H.R. 507), which would exempt from the credit union member business loan cap loans made to veteran-owned businesses.
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