On November 4, 2022, SBA’s Proposed Rule, Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization, (RIN 3245-AH92) was posted in the Federal Register Reading Room to give the public a preview of the proposal which will be officially published on Monday, November 7, 2022.
Per this Proposed Rule, SBA is proposing to “lift the moratorium on licensing new Small Business Lending Companies (SBLCs)” with its ability to accept new program participants being “tied to market conditions and SBA’s capacity to supervise and oversee additional lenders”. SBA also is proposing to add a new type of SBLC entity called a “Mission-Based SBLC”, which would be non-profit entities licensed by SBA for the sole purpose of making 7(a) loans in order to better meet the needs of underserved communities. The proposal would allow current CA Pilot Program lenders to transition to this new permanent lender status. SBA also is proposing to increase the number of “regular” SBLCs to allow the agency to accept applications for regular SBLC Licenses from time to time as published in the Federal Register. The proposal indicates that, based on its current oversight capacity, SBA anticipates that it presently has the ability to license and supervise three new regular (non-Mission-Based) SBLCs.
The Agency also is proposing, for both the 7(a) and 504 Programs, to remove the requirement for separate Loan Authorization. It would, instead, rely on information entered into E-Tran to establish the terms and conditions under which a specific loan guaranty would be approved by SBA.
Comments on the Proposed Rule will be due 60 days from the date of official publication, so presumably on January 6, 2023. NAGGL will provide a complete summary of the Proposed Rule within the next few days.
