Biden-era loan policies revoked; SBA restores stringent loan approval criteria
Wave goodbye to the "Do What You Do" era - the SBA's pulling out all the stops to preserve the financial health of America's small businesses! Yep, that's right, the SBA's done away with a slew of Biden-era policies that'd crippled the 7(a) loan program.
You might be wondering, "What's the big deal with these Biden-era policies?" Well, these so-called policies had stripped away every responsible lending guideline, leaving the program in a vulnerable, cash-strapped state that threatens both small businesses and taxpayers' wallets.
And Administrator Loeffler's got no chill about it. She fiercely denounced the previous administration's reckless decisions, stating that their lax policies had caused a tsunami of loan defaults, potentially sinking the 7(a) program into the depths.
So, what the heck is the SBA 7(a) loan program? Think of it as a government-backed lifeline for small businesses that can't secure traditional financing. It's designed to operate without subsidies, relying on lender fees to cover borrower defaults. And historically, it's managed to keep itself afloat, thanks to these solid financial principles.
But when Biden and co. rolled into town, they tossed out those responsible lending standards and implemented a new policy called "Do What You Do." This take-no-prisoners approach gave lenders the green light to bail out borrowers who would've previously been shot down for loans. As a result, the program saw a surge in defaults and delinquencies, eventually racking up a $397 million deficit in 2024 - the first negative cash flow in 13 years!
But fear not, my small business-owning friends! The SBA's not letting this happen again. Last month, they took the first step in reversing course by reinstating lender fees in the 7(a) loan program. And just this week, they dropped another bomb - SOP 50.10.8! This new policy announces the death of "Do What You Do" and brings back pre-Biden lending standards with a vengeance.
That's not all. The SBA's also dusting off the Franchise Directory and giving it a good polish. This handy resource helps lenders evaluate the eligibility of businesses seeking SBA loans, encouraging financial responsibility and transparency.
There's more, though. One of Loeffler's pet projects, the Made in America Manufacturing Finance Act, aims to double SBA loan limits for small manufacturers. This move's designed to give small businesses the cash they need to grow, modernize, and compete in the global marketplace, aligning perfectly with that old "America First" slogan.
So, in a nutshell, these changes are all about tightening up lending standards and strengthening the 7(a) loan program, while supporting small manufacturers and emphasizing fiscal responsibility within the SBA. And that's nothing to sneeze at!
Sources:
- https://www.datacubedynamics.com/blog/sba-looks-to-raise-loan-limits-for-small-manufacturers/
- https://www.sba.gov/blogors/ BlogPost/admin-loeffler-new-approach-prioritizes-small-business-recovery
- https://www.investopedia.com/terms/0055455/7a_loan_program.asp
- https://finance.yahoo.com/news/sba-reverses-biden-era-policies-122510592.html
- The U.S. Small Business Administration (SBA), reintroduces pre-Biden lending standards under Administrator Kelly Loeffler, aiming to strengthen the 7(a) loan program.
- Administrator Loeffler has introduced SOP 50.10.8, a new policy that marks the death of the "Do What You Do" policy and brings back responsible lending standards in the SBA 7(a) loan program.
- To help small businesses secure traditional financing, the SBA's 7(a) loan program, although financially self-sufficient, had been left in a vulnerable state by the Obama administration's "Do What You Do" policy, resulting in a $397 million deficit in 2024.
- The SBA, under Administrator Kelly Loeffler, seeks to double SBA loan limits for small manufacturers as part of the Made in America Manufacturing Finance Act, emphasizing fiscal responsibility and supporting small businesses.
- To promote financial responsibility and responsibility within the program, the SBA is dusting off the Franchise Directory, a resource that helps lenders evaluate the eligibility of businesses seeking SBA loans, and giving it a good polish.
