SBA Seeks Comment on Borrower Eligibility for 7(a), 504 Programs

The Small Business Administration is set to issue an advance notice of proposed rulemaking to seek public input on establishing size standards for businesses eligible for its 7(a) and 504 loan programs. The agency invited suggestions on data sources and other information it should evaluate in developing a permanent alternative size standard under the Jobs Act and assessing its effects.

SBA has been relying on an interim rule setting a temporary alternative size standard at $15 million in tangible net worth and $5 million in average net income “because of the difficulty of obtaining relevant data,” the agency said.

“A review of SBA’s internal data on its business loan programs shows that the temporary statutory alternative size standard may have enabled some small businesses that were not otherwise eligible under their industry based size standards to receive 7(a) or 504 loans,” added SBA. “However, SBA’s internal data systems for its business loan programs lack the necessary detailed electronic data that would allow for an assessment of the exact impact of the interim rule on small business loan applicants.”