WASHINGTON —U.S. Senators Jim Risch (R-Idaho), Mike Crapo (R-Idaho), and Tim Scott (R-S.C.) introduced the Protecting Access to Credit for Small Businesses Act to prohibit the Biden administration from enacting their plan to make the Small Business Administration (SBA) a direct lender, which would force financial institutions like community banks and credit unions – who already provide loans – into competition with the government.

“Access to capital remains one of the biggest challenges small businesses face,” said Risch. “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.”

“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,” said Crapo. “We can rely on our private institutions to help small businesses access capital without putting them in direct competition with the federal government.”

“When acting as a direct lender, the SBA has a consistent history of failure and inefficiency when compared to the private sector,” said Scott. “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 is cosponsored by Senators John Kennedy (R-La.), Kevin Cramer (R-N.D.), Chuck Grassley (R-Iowa), Steve Daines (R-Mont.), James Lankford (R-Okla.), Joni Ernst (R-Iowa), John Cornyn (R-Texas), Ted Budd (R-N.C.), Tom Cotton (R-Ark.), Rick Scott (R-Fla.), and Mike Braun (R-Ind.).

BACKGROUND

President Biden’s Fiscal Year 2025 budget includes a proposal to allow the SBA to directly make loans under the 7(a) lending program. However, the SBA has a history of performing poorly in lending programs compared to the private sector. The SBA Office of the Inspector General estimated in 2023 that the federal government Economic Injury Disaster Loan program, which was a direct-lending program, had $136 billion in potential fraud – that is 33% of total funds disbursed by the program. 

The legislation is supported by American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, Bank Policy Institute, America’s Credit Unions, and South Carolina Bankers Association.