House Small Business Committee Chairman Sam Graves (R-MO) today introduced legislation that will streamline and simplify the loan application process at the Small Business Administration (SBA) by requiring the agency to permit the use of e-signature and electronic records. The Small Business Loan Simplification Act of 2014 (HR 5599) would statutorily bring the SBA up-to-speed with technology already being used by private lenders and other federal agencies. Rep. Steve Chabot (R-OH), Rep. David Schweikert (R-AZ), Rep. Richard Hanna (R-NY), Rep. Tim Huelskamp (R-KS), and Rep. Chris Collins (R-NY) are original co-sponsors.
“Access to capital continues to be a major issue for many small businesses and people trying to start new companies,” said Chairman Graves. “A lengthy and complicated loan application process is often a great impediment for many small businesses to secure the capital they need to get their products or services to market. The majority of the time spent during the SBA loan application process consists of lenders collecting required documentation and having to seek out the ink signatures of borrowers. The Small Business Loan Simplification Act of 2014 will employ widely used and proven e-signature and records technology to reform the SBA loan process. This will likely cut the application process by an average of 2 to 3 days.”
The Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000 made valid the use of e-signatures on binding documents, but the SBA has not yet permitted their use during the application process for its array of financing programs.
General bank lending to small businesses still has not returned to pre-recession levels. According to the Federal Deposit Insurance Corporation, at the end of the first quarter, banks held $585 billion in loans to small businesses, which is 18% lower than in 2008. And the number of loans for $1 million or less held by banks is down about 14% from 2008.
The bill is widely supported by industry, including the leading providers of electronic signature and record technology, the banking community, and a number of organizations representing various types of SBA lenders.
Small Business Loan Simplification Act of 2014 (HR 5599):
• Permits participants in SBA financing programs, both borrowers and lenders, to use electronic signatures and records in the certification and transmission of documents.
• Requires the SBA to accept electronic signatures and records associated with the management of its financing programs.