Clear and consistent guidance will be needed from the Small Business Administration (SBA) on the expansion of its 7(a) loan program due to the coronavirus disease (COVID-19) pandemic, CUNA and other organizations wrote Tuesday. Congress has agreed on legislation that includes, among other things, includes $350 billion in funds for a temporary, expanded SBA 7(a) loan program aimed at providing small businesses with funds for critical items such as payroll, rent obligations, and utilities.
This expansion also allows nearly any lender to apply and become a 7(a) lender, and includes $17 billion in funds to be used for up to six months for small businesses with existing 7(a) loans, bringing the total aid to $367 billion.
“Currently, banks and credit unions play a vital role in all of SBA’s lending processes and we stand ready to aid in disbursing these additional funds to small businesses nationwide. In order for our members to work effectively to help achieve this goal, they will require clear and consistent guidance on how SBA intends for the program to operate,” the letter reads. “Helpful inclusions in this guidance should be bright-line rules, free from ambiguity. The more straightforward, and detailed the materials coming out of SBA, the easier it will be for lenders to quickly and effectively process new loan applications.”
The organizations add that strong, specific guidance will make credit union and other financial institutions’ assistance to SBA, small businesses and consumers more achievable.