Capital Briefs: Exception Urged in SBA LowDoc Standard

Industry representatives are urging the Small Business Administration to loosen the qualifications to participate in the agency's low-documentation, or LowDoc, loan program.

In comment letters, trade group officials said a Jan. 3 interim rule that defines "experienced" small-business lenders discriminates against de novo banks.

In the rule, the agency defined an experienced lender as one with 20 outstanding commercial loans of less than $100,000.

Newly chartered banks do not have small-business loans on their books but may have employees experienced in SBA lending, wrote John C. Rasmus, senior federal administrative counsel for the American Bankers Association.

"It is important to establish an exception process so that those lenders which do not strictly meet the 20-qualifying-loans requirement yet possess adequate levels of small-business lending experience will satisfy the requirement," Mr. Rasmus wrote.

Leland M. Stenehjem Jr., president of the Independent Bankers Association of America, agreed, suggesting that the SBA offer case-by-case exceptions for new banks wishing to enter the LowDoc program.

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