Kelly Loeffler - New SBA Chief

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February 26, 2025

by a searcher from University of Pennsylvania - The Wharton School in Tampa, FL, USA

Anybody else read how they are going to tighten up SBA lending? Concerned?

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Reply by a lender
from University of Missouri in St. Louis, MO, USA
Program is universally liked by both sides of the political aisle since it precludes larger businesses from accessing the funds. The program(s), while covering a lot of acquisitions, also covers things like start-ups. real estate, working capital loans and other functions where traditional bank loans are not plausible or require significant capital allocation. I would be surprised if there is a pull back of any kind in terms of the amount of money that is funded. However, reading through the tea leaves of the memo Administrator Loeffler put out yesterday, here are some thoughts I could see (emphasizing this is opinion and not anything formal from the SBA or my employer):

1. I would not be surprised for manufacturing to get a boost. This could be in the form of a higher guarantee to higher maximum threshold but that was the only industry that was singled out for "promotion."

2. Most of the executive orders, include DOGE activities, would be less impactful in the SBA than in other organizations. For a federal govt office, SBA is surprisingly efficient. A lot of the leg work is done by banks and guaranty fees cover most if not all of the overhead so getting more efficient would be with a scalpel not a chainsaw.

3. I would not be surprised if some banks get their PLP pulled and possibly non-banks having their SBA authority pulled. A lot of the fraud referenced was due to weak or non-existent know your customer policies during COVID.

4. Ending "do what you do" could have an impact on some acquisitions. Relying on individual bank policies allowed some lenders to be hyper aggressive. With the increase in defaults I would imagine they will update the SOP and be less lenient on interpretation.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I concur with some comments already made. The SBA lending programs in particular are very popular on both side of the aisle. The SBA lending programs are also a profit center for the government. They take in more money in government guarantee fees each year then they pay out in losses, so the program is more than self-sufficient. That makes it a low risk proposition. With the current administration very pro-business, I do not see any negative changes coming to the program. There could be some positive ones if they decide to expand the program more or increase the guarantee limits.

I think most of the concern is in cutting waste in other areas of the SBA. You could see some ancillary programs have funding cut, but I do not envision a major change to the SBA lending programs. As a side benefit, if everyone is back in the office, we might see some response times improve when issues come up.
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