East Idaho Times

U.S. Senators Mike Crapo, Jim Risch, and Tim Scott have introduced the Protecting Access to Credit for Small Businesses Act, aimed at preventing the Biden administration from implementing a plan to have the Small Business Administration (SBA) become a direct lender. This move would force financial institutions like community banks and credit unions into competition with the government.

Senator Crapo expressed his concerns, stating, “It is no surprise the Biden administration would like to insert the heavy hand of the federal government into a role community banks and credit unions already serve. We can rely on our private institutions to help small businesses access capital without putting them in direct competition with the federal government.”

Senator Risch echoed these sentiments, emphasizing the challenges small businesses face in accessing capital. He criticized the administration's proposal, saying, “The Biden administration’s proposal to insert the federal government in a process private lenders have handled well for years does nothing to help our small businesses thrive.”

Senator Scott highlighted the historical inefficiencies of the SBA when acting as a direct lender, stating, “When acting as a direct lender, the SBA has a consistent history of failure and inefficiency when compared to the private sector. The administration’s proposal is just a vehicle for a big government overreach into nearly all aspects of American life and private institutions. There’s simply no reason to use the federal government to funnel tax dollars that will later be loaned back to small businesses.”

The bill has garnered support from several other senators, including John Kennedy, Kevin Cramer, Chuck Grassley, Steve Daines, James Lankford, Joni Ernst, John Cornyn, Ted Budd, Tom Cotton, Rick Scott, and Mike Braun.

President Biden's proposal to allow the SBA to directly make loans under the 7(a) lending program has raised concerns, especially considering the SBA's history of poor performance in lending programs compared to the private sector. The legislation aims to address these concerns and prevent potential fraud, as highlighted by the SBA Office of the Inspector General's estimation of $136 billion in potential fraud in the federal government Economic Injury Disaster Loan program in 2023.

The Protecting Access to Credit for Small Businesses Act has gained support from various banking associations, including the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, Bank Policy Institute, America’s Credit Unions, and the South Carolina Bankers Association.