Independent Banker - August 2018 - 43

level every year. When that cap is reached, lending
under the program must be suspended. That is
exactly what happened in the summer of 2015,
bringing the program to an abrupt halt.
Following ICBA advocacy in 2015, Congress
passed emergency legislation raising the funding
cap and ensuring all 7(a) loans would be funded for
that fiscal year. A longer shutdown would have cut
off the thousands of small businesses that rely on
this program for payrolls, investment and expansion-putting
their businesses and local economic
growth in jeopardy. Policymakers, community
bankers and small businesses recognized the need
for a long-term solution.
Signed, sealed,
delivered
Working for you
In response, ICBA has worked with policymakers
to advance reforms that will ensure the continued
availability of the program to community banks and
borrowers. Those efforts ultimately paid off with the
bipartisan Small Business 7(a) Lending Oversight
Reform Act (H.R.4743), which was introduced in
January alongside a Senate companion bill and
signed into law by President Donald Trump in June.
As ICBA community banker Cynthia Blankenship
told the House Small Business Committee earlier
this year, H.R.4743 includes targeted reforms that
will promote a robust and sustainable 7(a) program.
To avoid disruptions like that experienced in 2015,
H.R.4743 stabilizes program funding by allowing
the SBA to lift the cap on general business loans
by up to 15 percent of the limit if it is determined
the cap will be reached.
The law also improves the integrity of all SBA
programs by codifying the SBA's Office of Credit Risk
Management, which manages credit risk and enforces
program requirements. The law ensures the office
director is qualified for the post, provides guidelines
for lender reviews, codifies lender appeals rights
and increases transparency in the office's budget.
It also codifies the Lender Oversight Committee,
which reviews the office's formal enforcement
recommendations, guaranteeing its continued
existence from administration to administration.
With the rising popularity of the 7(a) program,
these reforms will promote proper oversight.
Additionally, H.R.4743 safeguards the 7(a)
program from abuse by codifying the SBA's " Credit
Elsewhere Test, " which requires lenders to fully
substantiate and document the reasons a given
The bipartisan Small
Business 7(a) Lending
Oversight Reform Act
(H.R.4743 and S.2283)
was introduced in January
by Rep. Steve Chabot
(R-Ohio) and Sen. Jim
Risch (R-Idaho). After
quickly advancing
through Congress,
the House version was
signed into law in June.
Rep. Steve Chabot
Sen. Jim Risch
applicant cannot be served with conventional credit.
ICBA fully supports this test as an appropriate
measure to ensure the program is used responsibly.
Community banks are the nation's leading
small-business lenders-making more than 60
percent of small-business loans under $1 million
while holding less than 20 percent of U.S. banking
industry assets. These loans, which support a
sector responsible for more job creation than any
other, cannot be duplicated by larger and more
remote institutions.
Ultimately, the Small Business 7(a) Lending
Oversight Reform Act will help maintain the
viability of an important lending tool, ensuring
its longevity for borrowers and lenders. ICBA will
keep working to ensure sufficient funding for and
access to the various SBA lending programs to help
community banks continue fostering a vibrant
small-business sector.
Quick stat
Community
banks make
more than
60%
of smallbusiness
loans
under $1 million
There's more online
This is just one front in ICBA's fight for
community banks. To learn more about
the Small Business 7(a) Lending Oversight
Reform Act and other recent policy
successes, visit icba.org/advocacy
independentbanker.org Q 43
http://www.icba.org/advocacy http://www.independentbanker.org
Independent Banker - August 2018

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