SBA

The Minneapolis-based banking giant is enjoying its biggest year ever for 7(a) lending, with volume up 40%, as borrowers "are still coming to us," its SBA chief said.

The agency admitted navigating the different rules and regulations involved in its four existing lines of credit proved time consuming and confusing and kept some lenders from offering them altogether.

Funding Circle US fought to win a coveted license to make SBA 7(a) loans only to see its London-based parent company agree to a sale before it could make its first government-guaranteed loan

While the $800 billion in PPP loans has largely self-liquidated through the forgiveness process, SBA continues to service the longer-duration EIDL portfolio and will likely be doing so for years to come after opting to hold on to the loans.

Isabel Casillas Guzman, administrator of the Small Business Administration, wants the agency to get involved in direct lending, a practice that was discontinued during the Clinton administration. Congress has not embraced the idea, to put it mildly.

Republicans on the House and Senate Small Business committees are accusing the SBA of being irresponsible in granting Funding Circle permission to participate in its flagship loan-guarantee program.

The decision to approve the fintech's application to make 7(a) loans came nearly a month after Funding Circle's U.K.-based CEO hinted it is considering a sale of its U.S. operations, alarming some members of Congress.

Last year, the Raleigh, N.C.-based Integrated called off a deal to sell itself to MVB Financial after bank stocks took a hit in the aftermath of the regional bank failures. Capital hopes to expand its government-guaranteed lending with the transaction.

Investing in Main Street Act has passed the House three times with overwhelming majorities but has failed to gain traction in the Senate. Backers, including banks that invest in the funds, hope to flip the script with a third version.

The agency plans to restrict access to a system that provides borrower tax returns to mortgage lenders beginning June 30. Left out of the loop, small-business lenders say getting credit to borrowers will become more difficult as a result.

America First Credit Union wants to grow 7(a) lending, but its expansion prospects depend on hiring more experienced lenders. That's proved a common challenge for other institutions as the Small Business Administration program continues to grow in popularity.

Since the end of the Small Business Administration's 2022 fiscal year, the average loan size in its flagship program has dropped more than six figures. The addition of three new nondepository lenders could further drive down this figure.

Small Business Administration lending is an arena where community banks and nonbanks compete favorably with some of the largest U.S. financial institutions. Here are the biggest SBA 7(a) lenders based on the value of approved loans.

Los Angeles-based Lendistry — in less than two years — became the largest Black-run 7(a) lender. Its CEO credits a concerted effort by the Small Business Administration to reach out to minority lenders and businesses, whose participation in the lending program is growing.

This week the Small Business Administration followed through with a controversial policy change by granting access to its flagship 7(a) program to three additional nonbank lenders. These new participants vowed to ramp up their small-business lending efforts.

Denver-based InBank will expand into Georgia and Arizona, part of a wider plan to seize market share and build what one executive called a top-tier SBA lender.

Critics complain a bill sponsored by the leaders of the Senate Small Business Committee would reinstate a moratorium on participation in the SBA's flagship 7(a) program by nondepository lenders. Supporters of the bill argue that widening the program could invite more fraud.

As it pushes the boundaries of its Midwestern footprint, the Columbus, Ohio-based bank is on pace to book more than 6,000 7(a) loans in SBA's 2023 fiscal year, the biggest total in seven years.

After the departure of a key Small Business Administration official, lawmakers from both parties are calling on the SBA's chief to delay rules that could open the agency's biggest lending program to more nonbanks — or even consider reversing the changes.

BayFirst Financial, which says it lost $1.6 million when a planned Small Business Administration loan sale to Signature fell through, plans to file a claim for the lost revenue with the Federal Deposit Insurance Corp.