Chairman Williams: "Taking on More Risk: Examining the SBA's Changes to the 7(a) Lending Program Part II"
Chairman Roger Williams' Opening Statement
Washington, May 17, 2023
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a full committee hearing titled “Taking on More Risk: Examining the SBA’s Changes to the 7(a) Lending Program Part II.”
Chairman Roger Williams’ opening statement as prepared for delivery:
Good morning and welcome to today’s hearing which will focus on the Small Business Administration’s changes to the 7(a) Loan Program.
At last week’s full committee hearing on this vital issue with the SBA, many of our questions went unanswered, so I hope today can serve as a constructive conversation on how these changes add unnecessary risk and threaten the 7(a) program’s long-term integrity.
Just one day after our hearing last week, Associate Administrator Patrick Kelley, who testified before us, was dismissed from the Agency. While the circumstances around his departure are still not clear, there are two logical suggestions. First, his contempt for basic Congressional oversight was apparent and the SBA did not think his behavior was appropriate for the agency. Or second, he submitted his resignation months ago, and the SBA decided to send someone to testify on these major rule changes knowing that he could be parting ways with the agency shortly after. Whichever scenario is accurate, both of these are extremely concerning as we do our Congressional due diligence over these new rules.
Members of this Committee on both sides of the aisle still have unanswered questions regarding these changes and are concerned that the SBA is continuing to move forward without the leadership in place to help make these transitions as smooth as possible. This concern is not only bipartisan here on this Committee but is also shared by our colleagues in the Senate. Yesterday, I, along with Ranking Member Velázquez, Chairman Cardin, and Ranking Member Ernst jointly penned a letter to Administrator Guzman, saying that it is our collective belief that at the very least, it is best to find a new permanent head of the Office of Capital Access before these changes go into effect.
Finalizing the proposed rules represents the most significant changes to the program in decades. I hope that we will be able to have a productive discussion about how the changes to the lending criteria will add more risk to the taxpayer backed loan portfolio, and how these changes will weaken the credit elsewhere test and take the SBA away from being the lender of last resort. Additionally, I hope to discuss the SBA’s capabilities as a regulator and if they are properly equipped to take on this increased responsibility, and also if the proper guardrails have been installed since the agency let billions of taxpayer dollars be stolen from the pandemic loan programs.
For decades, the 7(a) program has been operating on a bipartisan basis to help businesses get off the ground with their capital needs. Unfortunately, I am afraid that these changes will lead to a greater default rate that will rely on the program to continually be subsidized by Congress in order to remain in existence.
I am not alone in raising these concerns. The SBA’s Inspector General himself testified before this committee and noted that there are significant challenges that the agency will face in managing the increased loan volume going forward as well as the significant shortages of staff within the department that oversees this program.
We cannot allow the SBA to get these rules wrong. I will once again call on the Biden Administration to slow down until we can properly determine how these changes will work in practice.
I want to thank you all again for being here with us today and I am looking forward to a more constructive conversation today.
With that I will yield to our distinguished Ranking Member from New York, Ms. Velázquez.