The House voted 214-198 today in favor of a bill to cap the number of for-profit small-business lending companies eligible to make loans under the Small Business Administration’s 7(a) Program. The American Bankers Association supported the legislation.
The Capping Excessive Awarding of SBLC Entrants Act, or CEASE Act, led by Rep. Rob Bresnahan (R-Pa.), would cap at 16 the number of SBLCs in the 7(a) program. In 2023, the SBA lifted the moratorium on the number of SBLCs that could participate while simultaneously loosening underwriting standards for these loans, with deleterious results, ABA said in a letter to lawmakers.
“Available data indicate that the program has experienced increased defaults since the 2023 rule changes went into effect, particularly in loans originated by nonbank lenders,” ABA said. “Capping at 16 the number of for-profit SBLCs in the 7(a) Program is a critical step towards safeguarding the long-term viability and integrity of the program.”
Passage of the CEASE Act “will strengthen 7(a) small business lending and enhance the ability of banks to make these critical loans that drive economic growth in our nation’s communities,” ABA said.
Three Democrats joined Republicans in passage of the bill, which now moves to the Senate.
