Washington, D.C. — U.S. Senator Ted Budd (R-N.C.) joined Senator Tim Scott (R-S.C.) in reintroducing the Protecting Access to Credit for Small Businesses Act to protect community banks and credit unions from competing with the federal government. The bill does so by prohibiting a Biden-era rule that allows the Small Business Administration (SBA) to facilitate direct government lending.
“Time and again, the federal government has shown it is neither efficient nor effective when it comes to delivering direct loan support to small businesses. Community banks and credit unions, not Washington bureaucrats, understand the needs of the businesses they serve. It’s time we stop sidelining them. I am proud to join Senator Scott and my colleagues to put power back in the hands of local institutions that invest in our communities, rather than forcing them to compete with the federal government,”said Senator Budd.
“The SBA has a poor track record as a direct lender, especially compared to local banks that know the communities they serve. Allowing the SBA to directly offer loans is not just another example of government overreach, it would also hurt Main Street by creating unnecessary competition with community banks and credit unions. The private sector has a much stronger record of managing loans effectively, and the last thing we need is big government disrupting a system that local businesses rely on,” said Senator Scott.
Senators John Barrasso (R-Wyo.), Kevin Cramer (R-N.D.), Mike Crapo (R-Idaho), Steve Daines (R-Mont.), Cindy Hyde-Smith (R-Miss.), James Risch (R-Idaho), and Rick Scott (R-Fla.) also co-sponsored the legislation.
The bill has received support from the American Bankers Association, America’s Credit Unions, Bank Policy Institute, Carolinas Credit Union League, Consumer Bankers Association, Independent Community Bankers of America, and South Carolina Bankers Association.
Read the full bill text HERE.
BACKGROUND
- President Biden’s fiscal year 2025 budget included a proposal that allows the SBA to directly make loans under the 7(a) lending program.
- The SBA has a history of performing poorly in lending programs compared to the private sector.
- According to the SBA Office of Inspector’s 2023 report, the government-led COVID-19 Economic Injury Disaster Loan (EIDL) program had $136 billion in potential fraud (33 percent of total funds disbursed). In contrast, the private-sector-led Paycheck Protection Program (PPP) had $64 billion (8 percent of funds disbursed).
###
