NSBA, Fundation Urge Fed on Small Biz Lending

December 17, 2020

December 17, 2020

Barry Feierstein

Molly Day

Washington, D.C. – The National Small Business Association (NSBA) and Fundation Group LLC (Fundation), a FinTech company serving the small business market, today submitted a joint proposal to the Federal Reserve Board that would create a new public-private partnership to provide critically-needed working capital to America’s small business community. The proposed framework is designed to augment the Paycheck Protection Program (PPP) and have maximum impact in a short timeframe while providing for a longer window of access to credit for the small business community than offered under the PPP. The proposal accomplishes this through a risk-sharing arrangement that aligns the economic interests of the private market and U.S. taxpayers, and enables the banking community to utilize their existing conventional loan and line of credit products.

Key details of this proposal include:

Sam Graziano, Fundation’s Chief Executive Officer, commented, “The Paycheck Protection Program (PPP) has been an enormous success and SBA programs will continue to have an important impact, but the small business market will need access to capital that provides these vital businesses with maximum flexibility to make their own varied decisions on how to rehabilitate their companies and to obtain that capital with minimal friction. On the other hand, the bank and non-bank lending community did not develop their underwriting strategies for ‘pandemic’ scenarios, so there is a natural reluctance to commit substantial capital to this market in the near-term.  The framework we have put forth provides the lending community with the confidence they need to deploy capital at scale, but aligns the economic interests of lenders, borrowers and the U.S. taxpayer, and we believe could be a model for future public-private programs.”

“More than 75 percent of small firms report major business disruptions—from employee absences to reduced customer demand—due to the pandemic,” stated NSBA President and CEO Todd McCracken. “While the PPP and EIDL programs have been a lifeline to many small businesses, there is still a huge demand for help, specifically in the form of capital. Policymakers must do everything in their power to ensure small businesses have access to a broad, diverse array of financing options if we want to kick-start any kind of sustainable economic recovery.”

With Congress currently negotiating another COVID relief bill, which could include an additional round of the PPP, NSBA and Fundation copied leaders of the U.S. Senate and House Small Business Committees on their letter to Federal Reserve Board Chairman Jerome Powell.

To see the detailed proposal submitted to the Federal Reserve Board this morning by NSBA and Fundation, click here.

The National Small Business Association, the nation’s oldest nonpartisan small business advocacy organization, is comprised of more than 65,000 small-business members representing every state and every industry across the country.

Fundation Group LLC is a leading financial technology company that powers small business lending through private-labeled technology solutions and as an originator of small business credit.