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Williams, Luetkemeyer, Van Duyne, and Meuser Raise Concerns Over the SBA’s Changes to its Flagship Lending Program

Committee Raises Concerns on SBA 7(a) Changes

WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) along with Vice Chairman Blaine Luetkemeyer (R-MO), Oversight Subcommittee Chairman Beth Van Duyne (R-TX), and Economic Growth Subcommittee Chairman Dan Meuser (R-PA) issued the following statements after penning a letter to the Small Business Administration’s (SBA) Office of Capital Access Associate Administrator Patrick Kelley regarding the SBA’s new rules significantly changing the flagship 7(a) lending program.

“The SBA had already faced major challenges in the years leading up to the pandemic,” said Chairman Williams. “These existing issues were exacerbated during COVID-19 and culminated in the agency’s historic failure to safeguard against fraud within its programs, costing the American taxpayer billions of dollars. Even with the agency’s abysmal record, the SBA is charging forward with reckless changes to its flagship 7(a) lending program. Plain and simple, the agency does not have the ability to take on additional responsibilities laid forth in these rules. The SBA's Inspector General shared these concerns, and it is imperative that the SBA gets back to basics and demonstrates basic competency before adding more risk to the government-backed lending program.”


“As SBA Inspector General Mike Ware echoed in his testimony, without clear rules of the road in place specific to FINtechs, conducting the necessary oversight and preventing fraud in the 7(a) program would be very difficult,” said Vice Chairman Luetkemeyer. “Expanding the SBA’s 7(a) lending program to allow FINtechs to receive these loans is concerning and an area where caution should be exercised.”


“From allowing fraud to run amok in pandemic relief programs, to this unprecedented weakening of lending standards in the 7(a) program, I am deeply worried by the Small Business Administration’s pattern of incompetence and disdain for taxpayers,” said Rep. Van Duyne. “As Co-Chairman of the Congressional Franchise Caucus, I’m particularly concerned by the impact of this rule on our franchise small businesses, which are a vital part of our economy in North Texas. I remain focused on cutting red tape for our job creators, while ensuring taxpayers are not forced to bail out the 7(a) program.”


 “The SBA’s 7(a) Program is an important resource in delivering capital to underserved small businesses. While the program has been successful, I’m concerned the SBA’s decision to make significant changes to this flagship program will harm its success. Over the past three years, we have seen the SBA struggle to handle the influx of COVID lending programs, and these new proposed changes will likely stretch the agency’s staff thin and unnecessarily put taxpayer dollars at risk,” said Rep. Meuser.


Read the full letter here.

Read key excerpts from the letter:

“On April 19, 2023, the Small Business Committee, Subcommittee on Oversight, Investigations, and Regulations held a hearing with the Small Business Administration’s (SBA) Inspector General (IG) Hannibal ‘Mike’ Ware. During this hearing, Republicans asked several questions about the SBA’s new rules which would make significant changes to the flagship 7(a) lending program. The Committee is gravely concerned that the SBA is unable to handle this expanded responsibility given their failures under the COVID lending programs. According to the IG’s testimony, he shares many similar concerns. OIG reports show that the SBA does not have the ability to manage the current loan volume or remedy existing fraud issues and expanding the program would be significantly challenging.”

“Further during the hearing, Chairman Roger Williams noted that the OIG issued a report stating that the OIG ‘anticipates the agency will face significant challenges in managing its loan volume going forward’ and asked IG Ware if he still had those concerns.  IG Ware ‘still shares those concerns, and he takes issue with the SBA’s assessment that data analytics will be enough to mitigate any potential issues.’ IG Ware stated on the issue with data analytics: ‘the capacity is what you build it to be, if you don’t build it with the right parameters in place you’re not going to be overseeing the right things, you’re going to miss the things you actually should be looking at and I don’t have an assurance that that has been built in because I haven’t seen it.’”