Earlier this year the Congress passed the Small Business 7(a) Lending Oversight Reform Act to grant the Small Business Administration (SBA) more authority over the program. The 7a program is an SBA Loan Program that “partners with financial institutions to guarantee loans made to small business owners that fund their startup costs, equipment costs, or any other general business purpose.”
As the agencies most popular program, the SBA sought more authority of the lending process to better minimize risk and guarantee repayment.
According to The Hill, the legislation “will strengthen SBA’s Office of Credit Risk Management – charged with overseeing SBA’s lending programs — by outlining in statute the responsibilities of the office and the requirements of its director. Checks and balances within the program keep SBA accountable to the small business owners, lenders, and the American taxpayers.”
In addition to oversight, the bill will require a yearly risk analysis to be performed and reviewed by Congress. The legislation will also increase flexibility to respond to any unexpectedly high demand “by giving the agency flexibility to make additional loans late in the year. This guarantees there is never a disruption in the flow of capital to businesses that count on this initiative for their financing needs.”