SBA Lending Rule Changes

February 12, 2020

Late last week, Senate Committee on Small Business and Entrepreneurship Chair Marco Rubio sent a letter to SBA Administrator Jovita Carranza calling for a delay to an interim final rule on SBA express loans.

In his letter, he states, “I am deeply concerned that this rule will have a detrimental impact on America’s 30 million small businesses, and their ability to access needed capital.” He went on to clarify that, should the rule proceed as intended by SBA, he would seek legislative remedies to ensure SBA “conducts a small business impact analysis, and work to engage with stakeholders in a productive way.”

The rule, “Express Loan Programs; Affiliation Standards, 83 Fed. Reg. 49,001” was first proposed on Sept. 28, 2018 and would expand the personal resources test to include anyone who owns 20 percent or more of a small firm seeking SBA lending. The rule also sets fee limits which some in the banking industry say could have a chilling effect on smaller loans which would be less profitable to the lenders under the new fee limits. Furthermore, the SBA has yet to perform the required small business impact analysis on the rule—a key sticking point outlined in Rubio’s letter.

Previously, in May 2019—shortly after former Administrator Linda McMahon stepped down—Rubio was joined by Senate Committee Ranking Member Ben Cardin (D-Md.), and House Small Business Committee Chair Nydia Velazquez (D-N.Y.) and Ranking Member Steve Chabot (R-Ohio) in calling for SBA to hold off on the rule for a number of reasons, including the need for a Senate-confirmed Administrator to be in place prior to the rule being implemented.

Despite Rubio’s request, the SBA published the interim final rule on Monday, Feb. 10 which outlines an effective date of March 11, 2020 and a compliance date of Oct. 1, 2020. SBA also opened the docket for additional comments which must be received by April 10, 2020.

Click here to read the full text of Rubio’s letter.

Click here to view or comment on the interim final rule.