As negotiations continued on Capitol Hill this weekend over the latest coronavirus aid package, a group of financial services trade associations—including the American Bankers Association—urged lawmakers include provisions that would enhance and incentivize the U.S. Small Business Administration’s 7(a) loan program in the final bill. The groups emphasized that “As in past periods of economic crisis, banks and credit unions turn to the 7(a) loan program as one of the most valuable tools to continue serving small business borrowers.”
While the Senate’s Small Business Task Force has been working to create a new “Small Business Interruption Loan Program,” the associations cautioned that this new program should not come at the expense of the “tried and true” enhancements for 7(a) loans. They recommended several changes to the existing program, including fee waivers for small business borrowers and lenders, increased federal guaranty, increased deferment flexibility and increased maximum loan size for all 7(a) and Express loans, among other things.
In addition, ABA and the Independent Community Bankers of America sent a letter to the leaders of House and Senate Agricultural Committees urging them to make adjustments to the Farm Service Agency loan programs to address the short-term and potentially long-term effects of the coronavirus pandemic.
Specifically, the groups called for a temporary increase of guaranteed loan limits to $2.5 million, an increase in funding for guaranteed loan programs and the reduction or suspension of origination fees. They also asked lawmakers to temporarily require the U.S. Department of Agriculture to streamline loan approvals, temporarily suspend environmental assessment requirements and pass the Enhancing Credit Opportunities in Rural America Act, an ABA-supported bill that would end taxation of interest earned from agricultural real estate loans. Finally, they called for additional changes to the FSA Direct Loan Program.