Join us on LinkedIn Follow us on Twitter Like us on Facebook Follow us on Instagram
 
  OCTOBER RESEARCH STORE Already a subscriber? LOG IN
AddControlToContainer_DynamicNavigation6

SBA grants first new SBLC licenses in over 40 years

Email A Friend Printer Friendly Version
0 comments
Industry Regulation, Nonbank Financial
Tuesday, November 14, 2023

Marking the first expansion of the Small Business Administration’s (SBA) program designed to facilitate growth in underserved markets in more than 40 years, the Biden-Harris administration recently granted three new Small Business Lending Company (SBLC) licenses.

SBLC licenses are intended to empower non-depository lenders to leverage government guarantees when underwriting small business loans, which reduces risks to such lenders while also reducing borrowing costs for some of the estimated 33 million small businesses operating in underserved markets.

When the SBA finalized its rule allowing for a new SBLC application window in June, the agency ended a four-decade moratorium on new licenses. The Biden-Harris administration has framed the move as a means for filling “gaps” in responsible financing options for minority-owned small businesses. The addition of the three new licenses will increase the number of SBLC-licensed lenders to 17.

“Persistent barriers to capital, especially small-dollar loans, still pose a challenge to many of the entrepreneurs who power our economy,” SBA Administrator Isabel Guzman said in a press release. “The Biden-Harris administration remains committed to filling capital market gaps – and the expansion of the SBA’s SBLC program after more than 40 years is a monumental step forward in this crucial effort. With the addition of three new Small Business License Companies, the SBA will be able to serve even more small business owners who need capital to start, operate and grow their businesses.”

The government-backing provided to SBLCs positions these entities to write higher volumes of loans to small businesses than possible without a government guarantee. SBA will issue up to three new licenses to qualified lenders based on a review of applications received during this application window.

The move is intended to complement the SBA’s overarching plan to streamline credit criteria and reduce red tape for SBA lenders.

The lending organizations selected to receive the new licenses are Arkansas Capital Corp., Alaska Growth Capital BIDCO, Inc., and Funding Circle. These companies were evaluated based on the following criteria before qualifying for the SBLC designation. Specifically, each applicant was required to demonstrate the following:

·         Existing lending policies in alignment with SBA’s mission;

·         Historical performance measures, such as default, purchase and loss rate; 

·         Whether they are subject to any legal proceedings, enforcement action, order or agreement with a regulator or the presence of other related concerns; 

·         Additional performance data associated with the applicant or its senior managers, along with other relevant information (such as SBA-observed gaps in small business lending not served by the existing 7(a) Lender population, including small-dollar lending and loans to underserved populations);

·         Affiliation with lenders or lender service providers previously sanctioned by SBA;

·         Adequate capital, fidelity insurance and other regulatory requirements.

Each of the newly appointed SBLC license holders will target historically underserved markets, including small businesses in Native, rural and low-income communities, according to the release. Top of Form

“For over 30 years, Arkansas Capital Corp. has used the SBA 7(a) program to support small businesses in underserved areas of Arkansas where accessing capital is uniquely cumbersome,” Arkansas Capital Corp. CEO Sam Walls III said in the release. “Arkansas Capital has bolstered regional economic development, but now with this SBLC license, we can widen our SBA 7(a) footprint as well, expanding our services to rural and poverty-stricken areas in the south to start.”

The Biden-Harris administration framed the move as aligning with efforts to grant permanent status to mission-based lenders under the Community Advantage SBLC license, expanding the network to 143 lenders making small SBA loans.

Despite its expressed support for efforts to support community development initiatives, the banking and credit union lobbies raised concerns about the SBLC program expansion, advocating instead for a bipartisan legislative solution such as the “Community Advantage Loan Program Act of 2023,” which was approved by the Senate Committee on Small Business & Entrepreneurship in September.

“We support the mission of the 7(a) program to encourage lenders to provide loans to underserved small businesses,” wrote five financial trade organizations in a letter to Ranking Members Rep. Roger Williams and Rep. Nydia Velazquez of the House Committee on Small Business. “However, we remain concerned that SBA’s decision to lift the moratorium on the number of non-federally regulated lenders in the 7(a) program while simultaneously loosening underwriting standards may negatively impact the performance of 7(a) loans, threaten the integrity of the program, and lead to increased borrower and lender fees.” 

With this change to the 7(a) program, the organizations fear the SBA will serve as the primary regulator to an unlimited number of lenders with a lesser level of federal oversight than that of traditional financial institutions.

“While we understand and fully support SBA’s stated goals of aiding underserved borrowers, we remain concerned that SBA’s changes do not meet those goals and may, in fact, create the potential for serious risk to SBA loan program integrity and to borrowers,” the trade groups wrote. “The recent rule and SOP changes erode the reliance upon decades-long prudent SBA lending standards, which have ensured acceptable loss rates and have kept program costs down for the very borrowers we all aim to aid while avoiding the need for a taxpayer subsidy.” 

The five trade groups undersigned on the letter are the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, the National Association of Federally-Insured Credit Unions and the National Association of Government Guaranteed Lenders.

Today's other top stories
New York AG sues Capital One in case mirroring dropped CFPB lawsuit
CFPB withdraws data broker rule proposal
MBA recommends TILA, HMDA revisions in OMB response
Former bank CEO, chair breached fiduciary duty in real estate transaction
Regulatory Roundup: States step up as federal agencies scale back enforcement


COMMENT BOX DISCLAIMER:
October Research is not responsible for the comments posted on its websites by readers. We will do our best to remove comments that include profanity or personal attacks or other inappropriate comments.
Comments:

Be the first to leave a comment.

Leave your comment
CAPTCHA Validation
CAPTCHA
Code:
: 
: 
Your Email is for reporting purposes only. It will NOT be displayed.
Popularity:
This article has been viewed 4156 times.

Monthly Newsletter

Dodd Frank Update May 2025

Cover Story:

Wolters Kluwer experts analyze shifts in banker compliance concerns


News by Topic   News by Edition   News by Agency   News by Industry   In-depth Reports   Events
Banking
Case Law
Conference Coverage
Consumer Protection
Data Privacy
Financial Stability
Industry Spotlight
Legislation
Nonbank Financial
The TRID Journey
 
Dodd Frank Update April 2025
Dodd Frank Update May 2025
Archives
 
CFPB NCUA
CFTC OCC
FDIC OFR
FHFA SEC
FRB States
FSOC Treasury
FTC  
 
Appraisal
Broker-Dealer
Community Banks & Credit Unions
Land Title
Mortgage
Payday Lending
 
2025 State of the Industry
CRA and Affordable Housing
2025 State of the Industry
Who's My Regulator?
Fair Lending
Mortgage Technology
Marketing Compliance for Lenders
Archives
 
National Settlement Services Summit (NS3)
Women's Leadership Summit (WLS)
Webinars

Library   About   Subscribe   Other Publications
Data Privacy Vault Court Actions
Keys to Real Estate podcast Enforcement Documents
Blog - Tuesdays with Mary Guidance Documents
1071 Compliance Guide White Papers
eClosing Solutions Showcase Position Papers
Executive Interview Series Legislation
Lender Associations Regulations
The Dodd-Frank Act Reports, Studies and Surveys
Dodd-Frank Summary & History Federal Register Notices
 
Dodd Frank Update
Contact / Editors
Advertise
Request a Media Kit
Social Media
Are You An Expert?
Subscriber Agreement
 
Subscriptions
Free Email Updates
Try a Free Edition
 
The Title Report
The Legal Description
Valuation Review
RESPA News
Copyright © 2011-2025 Dodd Frank Update
An October Research, LLC publication
3046 Brecksville Road, Suite D, Richfield, OH 44286
(330) 659-6101, All Rights Reserved
www.doddfrankupdate.com | Privacy Policy
VISIT OUR OTHER WEBSITES
> The Legal Description
> RESPA News
> The Title Report
> Valuation Review
> NS3 The Summit
> Women's Leadership Summit
> October Research, LLC
> The October Store


Loading... Loading...
Featuring:
  • Delivery 3X a week plus breaking news as it happens
  • Comprehensive title insurance industry news
  • Recent acquisitions, mergers, real estate stats
  • Exclusive in-depth coverage of the industry's hottest stories
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Comprehensive Dodd-Frank coverage
  • The latest information from the CFPB
  • Full coverage of Congressional hearings
  • Updates on all agency actions
  • Analysis of controversial provisions
  • Release of newest studies and reports
Sign up today and...
  • Be one of the first to know where NS3 is being held
  • Learn about NS3 speakers and sessions
  • Save on registration with Super-Early Bird rates
  • Discover the networking opportunities NS3 offers
  • Find out if CE credits will be offered for your area
  • And much more
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Preview the latest RESPAnews.com Top Story
  • RESPA related headline news
  • Quote of the Week
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Legal, regulatory and legislative information impacting the settlement services industry
  • News from HUD, Congress, state legislatures and other regulatory agencies
  • Follow the lobbying efforts of all the major national real estate services organizations.
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • The industry's only full-time newsroom
  • Relevant, up-to-date appraisal industry news
  • Covering the hottest stories and industry trends
NEWS BY TOPIC
EDITION
AGENCY
IN-DEPTH REPORTS
INDUSTRY
EVENTS
LIBRARY
EMAIL UPDATES
ABOUT
SUBSCRIBE
Banking
Case Law
Conference Coverage
Consumer Protection
Data Privacy
Financial Stability
Industry Spotlight
Legislation
Nonbank Financial
The TRID Journey
Current Edition
April 2025
March 2025
February 2025
Archives
CFPB
CFTC
FDIC
FHFA
FRB
FSOC
NCUA
OCC
OFR
SEC
States
Treasury
2025 State of the Industry
Real Estate Compliance Outlook
CRA and Affordable Housing report
Who's My Regulator?
Fair Lending
Marketing Compliance for Lenders
Archives
Appraisal
Broker-Dealer
Community Banks & Credit Unions
Land Title
Mortgage
Payday Lending
National Settlement
Services Summit (NS3)
Women's Leadership
Summit (WLS)
Webinars
CFPB's Shake-Up & Its Impact on You
2025 Economic Outlook Series
Data Privacy Compliance
Fintech Partner Compliance
Strategies post-NAR settlement
Industry and Regulatory Outlook
Securing Your Cyber Network
Compliant Marketing Tactics
2024 Economic Forecast Series
Webinar Archives
Data Privacy Vault
Keys to Real Estate podcast
Blog - Tuesdays with Mary
1071 Compliance Guide
eClosing Solutions Showcase
Executive Interview Series
Lender Associations
The Dodd-Frank Act
Dodd-Frank Summary
Court Actions
Enforcement Documents
Guidance Documents
White Papers
Position Papers
Legislation
Regulations
Reports, Studies and Surveys
Federal Register Notices
Proposals
Final Rules
GAO
Agency
Contact Us
Advertise
Request a Media Kit
Social Media
Are You An Expert?
Subscriber Agreement