The White House this week sent a news flash that could change the face of small business lending sometime next year.
Buried deep in a factsheet from October 4, entitled “Vice President Harris Announces New Public and Private-Sector Efforts to Advance Racial Equity at Freedman’s Bank Forum,” is a notice of a proposed rule change that the U.S. Small Business Administration is expected to undertake in the next few months, lifting a 40-year moratorium on new Small Business Lending Companies. Translation: Fintechs and other alternative lenders would be able to apply for a license to offer SBA-backed 7(a) loans.
The working capital loans, available for up to $5 million with repayment periods of seven to 25 years, depending on the purpose of the loan, are among the SBA’s more popular traditional loan programs. In its 2023 budget, the SBA requested $35 billion for its 7(a) program, up $5 billion from 2022. This proposal would not increase the amount of funds available to borrowers…
This article was written by Diana Ransom and originally published on www.inc.com