Headed by Isabel Casillas Guzmán, the SBA recently introduced simplified procedures for lenders and shared additional implementation details following the completion of two new rules.
The SBA has taken significant steps to address the gaps in access to capital for small business owners in the United States
To expedite eligibility determination for SBA-backed loans, the Small Business Administration (SBA) plans to internally handle eligibility assessments through new technology starting August 1, 2023. This move aims to alleviate the burden on SBA lenders and streamline operations. Additionally, in line with President Biden‘s commitment to combat fraud, the SBA will implement a new fraud review process for all loans in the 7(a) and 504 programs. This review will leverage advanced data analytics, third-party fact checks, and artificial intelligence tools to identify and prevent fraud before loan approval, effective August 1, 2023.
By implementing these measures, the SBA aims to allow lenders to focus more on their customers and expand lending opportunities, particularly for small-dollar loans. Historically, loan approval in these programs was primarily delegated to lenders, without upfront fraud checks by the agency. However, the SBA’s new Standard Operating Procedure (SOP) now includes simplified guidelines for lenders on making SBA loans.
Under the new rules, SBA lenders can use their existing credit policies for non-SBA loans of similar sizes, up to $500,000
This expansion of eligibility criteria will enable more creditworthy small business owners to access SBA loans, especially small loans. Furthermore, the SBA has introduced measures to reduce red tape, including the elimination of the Loan Authorization requirement, which was deemed duplicative and unnecessary for lenders.
The SBA has also provided clearer and simplified enrollment standards for small business owners and lenders, alleviating the burden of loan qualification. In the coming days, the SBA will release further updates, such as accepting new applications from lenders in the Small Business Lending Company (SBLC) program. This expansion will enable the program to support a greater number of small businesses. Applications for the SBLC program will be accepted from June 1 to July 31.
The SBA’s 7(a) and 504 loan programs are highly popular and offer flexible financing options for various business needs, including capital and equipment purchases. In the fiscal year 2022, these programs provided a combined capital of $35 billion to support 57,000 American small businesses.
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