CUNA calls for changes to SBA’s loan, affiliation proposal

December 18, 2018

CUNA is concerned about several recently proposed changes to the Small Business Administration’s (SBA) regulations pertaining to Express Loans and Affiliation Standards. CUNA sent a letter to the SBA Tuesday on the proposal, which seeks comments on those two issues, among others.

“While CUNA’s members are committed to supporting guidelines that help protect the integrity of the SBA’s loan programs and provide both lenders and borrowers with bright lines for compliance, we are concerned that some of the recently proposed changes are unduly burdensome and will have the unintended consequence of constraining credit unions’ ability to responsibly provide businesses with the capital and credit that they need,” the letter reads.

SBA Express Loans can be made for a maximum of $350,000, and feature a quick turnaround time, with the agency responding to applications within 36 hours. The proposed rule also addresses the SBA’s 504 economic development and 7(a) credit enhancement lending programs.

CUNA’s comment letter urges the SBA to reconsider three of its proposed changes:

  • The suggested re-implementation of the personal resources test, which CUNA believes will create compliance burdens and can paint an inaccurate picture of the amount of resources a principal actually has available to contribute as capital for the business;
  • The proposed cap on lender fees, which CUNA believes could unintentionally constrain small-dollar credit by making loans unprofitable; and
  • The application of an “identity-of-interest” standard, which CUNA believes will likely deprive a significant portion of the agricultural industry of access to SBA loan programs.