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Washington D.C.— Today, the House Small Business Committee held a hearing examining recent Small Business Administration (SBA) rule changes to the 7(a) loan program, the agency’s flagship lending initiative. During the hearing, Ranking Member Nydia M. Velázquez expressed concern about changes to safeguards in the 7(a) program and the impact of these new rules on the stability of a highly successful program.

“Increasing access to capital for underserved entrepreneurs has been and will remain a priority for me as the top Democrat on this committee. However, I am apprehensive about the SBA’s decision to remove many of the longstanding guardrails and program requirements on loan criteria and affiliation standards that have served the 7(a) program well while also lifting its moratorium on the licensing of new SBLCs,” said Ranking Member Velázquez. “As SBA moves forward with these rule changes, this committee must ensure they are responsibly implemented and don’t negatively impact the 7(a) program and individual borrowers.”

Under 7(a), SBA guarantees significant portions of loans, encouraging lenders to extend credit to small businesses that might not typically be able to obtain financing. So far, in FY 23, the SBA has approved over 30,000 loans totaling more than $14.6 billion.

In April, the SBA issued two final rulemakings that have substantial implications for the 7(a) program. The affiliation rule loosens lending criteria, updates loan conditions, and eliminates various affiliation standards. While the second rule on Small Business Lending Companies (SBLC) ends the SBA’s longstanding moratorium on licensing new SBLCs.

During the hearing, Members probed SBA Associate Administrator for the Office of Capital Access Patrick Kelley on the agency’s implementation of these rules and their impact on small businesses.

“When businesses cannot access capital, there are significant consequences and limited opportunities for underserved communities – including minority populations, women, veterans, and rural Americans,” said Associate Administrator Kelley. “Under Administrator Guzman’s leadership, SBA is committed to addressing this market gap with improvements that streamline our programs in order to better deliver on our mission and reach underserved businesses.”

“I remain committed to filling the gaps in the market in a bipartisan and thoughtful way. The Small Business Committees in the House and the Senate have proven that we can work together to make a difference for our Main Street businesses,” said Ranking Member Velázquez. “I look forward to doing just that again and working with the SBA and my Committee colleagues in both the House and the Senate to find a solution.”

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