SBA programs should continue as public-private partnerships

The Small Business Administration's (SBA) government guaranteed lending programs epitomize successful public-private partnerships, CUNA wrote to the House Small Business Committee Wednesday. The committee conducted a hearing on SBA’s entrepreneurial development programs, and CUNA noted its opposition to letting the SBA lend directly to businesses.

“Credit unions oppose any legislation that would remove financial institutions from their direct relationship with borrowers by allowing the SBA to lend directly to small businesses,” the letter reads “By becoming a direct lender to small businesses, the SBA is likely to harm local financial institutions’ relationships with businesses and possibly hamper these businesses from establishing important banking relationships that can only help their business survive and flourish.”

SBA’s lending programs, such as the 7(a) Loan Program, allow small businesses to work with lenders of a business’s choice throughout the loan process. The SBA guarantees these loans ensuring that financial institutions are made whole in an instance of default by the borrower.

CUNA added that the SBA’s public-private partnership works for borrowers who can borrow from institutions they trust, and that “when working with local lenders, small businesses are likely to benefit from guidance and experience from a lender with a stake in helping the borrowing business succeed.”