SBA announces next steps for new loan rules

Amid small business month, the U.S. Small Business Administration (SBA) announced streamlined lender procedures and other details for the implementation of two new rules that were finalized in April.

Those mandates, released this week, are aimed at closing gaps in capital access for small business owners by granting permanence to SBA’s program for nonprofit mission lenders, removing outdated limits on non-depository lender participation, increasing opportunities for employee ownership, and modernizing the credit criteria and underwriting standards to further incentivize a wider distribution network and small-dollar loans.

The SBA said it is building on those newly finalized rules by announcing its plans to:

• Streamline eligibility determination of SBA-backed loans by bringing eligibility determination on loans in-house through new technology.
• Add new fraud review on all loans by using advanced data analytics, third party data checks, and artificial intelligence tools for fraud review on all loans in the 7(a) and 504 loan programs prior to approval.

Both initiatives are set to begin Aug. 1.

“The ongoing modernization of SBA’s loan programs will help ensure more borrowers can get funded through a broader network of lenders so they can help build a strengthened American economic that innovates, manufactures and provides the products and services that make our lives better across Main Street,” said SBA Administrator Isabella Casillas Guzman.

“These new changes are an important step toward ensuring that more small business owners have the opportunity to grow and succeed,” said Associate Administrator Patrick Kelley. “SBA will safeguard taxpayer dollars, protect the integrity of our programs, and simplify the application process for both lenders and small business owners – a win-win for everyone.”