Pub. 2 2022 Issue 3


A View From the Capitol: The IMPROVE the SBA Act

The IMPROVE the SBA Act would prohibit the SBA from direct lending and reform disaster lending to better empower private sector lenders.

The Small Business Administration (SBA) has been in the spotlight for the last two years thanks to the pandemic.

As bankers are well-aware, the CARES Act established the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program to get emergency funding to American businesses at a historic pace with the help of smaller financial institutions. The PPP program did a lot of good and saved millions of jobs, thanks to many of you. But the pandemic also brought to light many of the shortcomings of the SBA.

As the Ranking Member of the committee with sole jurisdiction over this often-unaccountable agency, I recently introduced the IMPROVE the SBA Act to bring some much-needed reform. First and foremost, my bill would reform the SBA so the agency runs more efficiently to best serve small businesses without unnecessary regulation. Most small businesses don’t have the resources to deal with superfluous paperwork and government hoops to jump through — and it shouldn’t be necessary.

The bill would also ensure integrity in the SBA’s counseling services and increase the agency’s outreach to rural and smaller communities across the country, where small businesses can have an especially large footprint. And this bill would provide increased Congressional oversight and more transparency to the American public. According to the SBA Inspector General, the SBA’s Economic Injury Disaster Loan (EIDL) Program alone has squandered up to $84 billion in fraudulent loans over the past two years. That’s $84 billion coming out of taxpayers’ pockets going to fraudsters who take advantage of weak safeguards and SBA staff who refuse to perform due diligence. Clearly my reforms are badly needed.

Most importantly for bankers, the IMPROVE the SBA Act would get the SBA out of the direct lending business — something history has shown it is clearly not equipped to do — and turn the agency into purely a guarantor. The reason the PPP was such a success was because loans were being made by smaller community banks who know their customers and have a relationship with them. These business owners, fighting to keep their doors open, weren’t just a number in a database of millions like they would be if the federal government had been making these loans.

On the flipside, EIDL loans were disbursed by the federal government through the SBA and potentially had a 20% rate. While it has already been proven that the federal government has a long history of attempting to run direct lending programs without success, this certainly makes the point crystal clear.

The IMPROVE the SBA Act would prohibit the SBA from direct lending and reform disaster lending to better empower private sector lenders. The ICBA is one of the numerous groups that have already endorsed my bill. Small businesses are best served when the government lets you do what you do best and stops trying to compete with the private sector.

There are 32 million small businesses in America that spur economic growth, support nearly 61 million jobs, and spearhead innovation. Small and independently owned businesses are especially important in states like Missouri where we have many smaller and more rural areas. They help create good jobs and keep our local economies humming along, and they can’t do that without the support of local lenders. My bill ensures that SBA does not go after your business but instead, acts as a partner to support your customers. It’s better for small businesses, small banks, and the American taxpayers.