Re: Request for Feedback on U.S. Small Business Administration’s FY 2022-20226 Strategy Plan and Enterprise Learning Agenda
The Honorable Isabella Guzman
Administrator
U.S. Small Business Administration
409 3rd Street, S.W.
Washington, DC 20416
Dear Administrator Guzman:
The American Bankers Association (ABA) appreciates the opportunity to provide feedback on the U.S. Small Business Administration’s (SBA) FY 2022-20226 Strategy Plan and Enterprise Learning Agenda.
Banks of all sizes play a significant role in SBA’s lending programs, particularly SBA’s 7(a) program. Banks were proud to partner with SBA to execute the Paycheck Protection Program (PPP), which helped millions of small businesses remain open, maintain payroll, and save millions of jobs. Banks are eager to continue to support small businesses and promote economic growth in communities across America through participation in SBA’s lending programs.
ABA shares SBA’s strategic goals of ensuring equitable and customer-centric programs to support small businesses, building resilient businesses and a sustainable economy, and responsibly stewarding taxpayer funds. We offer the following feedback to strengthen SBA’s mission to serve small businesses.
First, SBA should improve communication from headquarters to its regional and district offices. During the PPP, bankers reported that when they contacted SBA’s regional and district offices with questions, too often the SBA office could not answer the banker’s question. In many instances, the SBA office had not received clear guidance from SBA’s headquarters that would have allowed the SBA office to provide a substantive response to the banker’s question. When lenders do not receive prompt responses to their questions, it impairs their ability to determine whether a small business qualifies for an SBA loan (or in what amount), potentially delaying the processing of the loan or, at worst, preventing the small business from receiving the loan. It is imperative that SBA’s headquarters provide consistent and timely guidance to its regional and district offices, so that those offices can respond promptly to lender inquiries.
Second, SBA should ensure that regional and district offices are adequately staffed. Along with unclear guidance from SBA’s headquarters, inadequate staffing appeared to contribute to unresponsiveness by SBA’s offices when bankers posed questions about loan applicants’ eligibility for PPP loans. SBA should ensure that it adequately staffs its regional and district offices to ensure they can promptly respond to all lender inquiries about SBA programs.
Third, SBA should be more transparent in its policy decisions and should share this information with key stakeholders and small businesses. For example, during the PPP, bankers reported that SBA denied “second draw” PPP loan applications when the application was submitted within eight weeks of the borrower’s receipt of a “first draw” PPP loan. However, SBA did not formally announce this requirement. Consequently, borrowers applied for a second draw PPP loan within the eight-week period and were denied for reasons unknown to the borrower. SBA should make it a priority to communicate clearly and promptly any policy decisions regarding loan programs to lenders and prospective borrowers.
Fourth, SBA should invite feedback on policy decisions related to its loan programs. We appreciate that, during the PPP, staff from SBA’s Office of Capital Access spoke with stakeholders from the lending community about changes to the agency’s operation of the PPP. However, those conversations typically occurred after SBA had made its changes to the PPP’s operation. We encourage SBA actively to seek feedback from lenders when forming the rules governing its lending programs, particularly for programs that are not operating under the PPP’s compressed time period for issuing loans, both through a formal comment submission process and informally.
Finally, we have concerns about the establishment of a direct lending program. We agree with SBA that the smallest of our nation’s small businesses need access to capital. However, a government-run program is not the solution when our nation has a robust financial services sector composed of private lenders. Instead of implementing a direct lending program, SBA should enhance the successful 7(a) program. By expanding the existing pool of SBA lenders, providing greater education to small business owners, and committing more resources to reduce application wait times, SBA can promote greater access to capital without undermining existing relationships between financial institutions and their customers.
Thank you for your consideration of this feedback.
Sincerely,
Jonathan Thessin
Vice President/Senior Counsel
Consumer & Regulatory Compliance
Regulatory Compliance and Policy
