SBA Issues Proposal to Increase Oversight of 7(a) Loan Program

The Small Business Administration has issued a proposed rule to implement recent ABA-supported legislation to strengthen the agency’s oversight of its loan programs and increase maximum lending authority. Comments on the proposal are due 60 days after publication in the Federal Register.

The proposal would strengthen the SBA’s office of credit risk management; enhance the SBA’s lender oversight review process; require SBA to detail its oversight budget and perform a full annual risk analysis of the program; and clarifies factors that must be considered under the “credit elsewhere” test that lenders perform before applying for 7(a) financing.