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SBA Reauthorization Picks Up Steam Heading into Recess

This blog is part of our “Road to Reauthorization” blog series, that builds off BPC’s latest small business report, Small Agency, Big Mandate: A Bipartisan Road Map to Modernizing SBA. The series provides small business owners, stakeholders, and advocates with updates and insight on congressional progress toward reauthorization of SBA. You can read the first six blogs in our series on congressional support for reauthorization here, here, here, here, here, and here.

Days before the Small Business Administration marked its 70th anniversary, lawmakers cleared a big hurdle on the road to reauthorizing SBA when the Senate Small Business and Entrepreneurship Committee approved a legislative response to recently enacted SBA lending rules. Just as importantly, and in keeping with longstanding bipartisan support for small businesses, Republicans and Democrats worked together to craft legislation that both sides could support.

Congress Pushes Back on SBA Rules

Last year, SBA proposed several significant changes to its lending support programs that raised concerns from members of both parties on Capitol Hill. Significantly, the proposed rules, which were finalized in April, removed the moratorium on issuing new Small Business Lending Company (SBLC) licenses, created a new Community Advantage SBLC designation, and eliminated some of the criteria lenders use to evaluate small business borrowers.

After the rules were finalized, Senator Joni Ernst (R-IA), ranking member of the Senate Small Business and Entrepreneurship Committee, called for a “legislative response” to the rules before discussing other aspects of SBA modernization. That response came on July 19 in a Senate Small Business and Entrepreneurship Committee markup.

With an 18-1 vote, the committee pushed back on SBA’s changes and cleared the way for SBA reauthorization to progress anew. Committee Chairman Ben Cardin (D-MD) called the actions “historic” and said they “reflect the bipartisan spirit of our committee and our goal to remain laser-focused on codifying, modernizing and streamlining SBA programs.”

Select Committee-Approved Changes to SBA Rules
Small Business Lending Companies Allows for SBA to issue up to three new SBLC licenses, capping licenses at no more than 17
Allows SBA’s Office of Credit Risk Management to revoke SBLC licenses of borrowers that make too many risky loans or for predatory lending
Community Advantage Makes the Community Advantage program permanent and undoes the Community Advantage SBLC designation
Expands the Community Advantage loan guarantee to as much as $750,000 for newly designated “experienced” Community Advantage lenders
Lending Criteria Reinstates many of the factors that lenders must consider when making SBA-guaranteed loans

 Committee Advances Multiple Reforms

In addition to the SBLC, Community Advantage, and lending rules changes, the Senate Small Business and Entrepreneurship Committee approved bill also seeks to expand access to child care, help small businesses hire graduates from career and technical training programs, and speed up the commercialization of technologies developed in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

Child care | Small businesses struggle with child care in two ways. First, many have limited means to help their employees find and afford high-quality child care, which can harm the company’s performance by limiting employee time and productivity. Second, most child care providers (95%) are themselves small businesses and struggle to balance quality, cost, and regulatory requirements. The committee-approved bill affords small, non-profit child care providers access to new funding opportunities by allowing them to patriciate in SBA loan programs.

Workforce | Talented, reliable, and skilled workers are essential to every small business, yet many small business owners struggle to find the help they need. Forty-two percent of small business owners, for example, report job openings they cannot fill, according to the National Federation of Independent Business. The committee’s bill addresses this challenge by directing Small Business Development Centers and Women’s Business Centers to help small businesses hire graduates from career and technical education programs.

Commercialization | SBIR and STTR provide critical support to small business innovators across the country. Congress made several improvements to these programs when reauthorizing them last year, which the committee built upon this month when it incorporated the Research Advancing to Market Production Act, S. 1396, into the bill it passed. The legislation’s inclusion signals bipartisan support for further strengthening SBIR and STTR.

Approved Legislation in Senate Markup
S. 1396 The Research Advancing to Market Production (RAMP) for Innovators Act Speeds up commercialization of technology developed by small businesses.
S. 1352 504 Modernization and Small Manufacturer Enhancement Act of 2023 Improves SBA’s 504 loan program and raises the loan limit for small manufacturers.
S. 1345 504 Credit Risk Management Improvement Act of 2023 Streamlines oversight and increases transparency and reporting for the 504 program
S. 673 Small Business Childcare Investment Act Makes non-profit childcare businesses eligible for SBA loans
S. 2099 Supporting Community Lenders Act Establishes a coordinator for Community Development Financial Institutions within the SBA to help advocate for community lenders
S. 936 Supporting Small Business and Career and Technical Education Act Helps technical education program graduates connect with and learn how to start small businesses
S. 38 Veteran Entrepreneurship Training Act Codifies the Boots to Business program for the first time and helps members transition into civilian life as small business owners
S. 2212 SBIC Advisory Committee Act of 2023 Establishes an advisory committee to increase diversity among SBIC participants
S. 1156 Native American Entrepreneurial and Opportunity Act Creates an Associate Administrator at the Office of Native American Affairs within the SBA
S. 943 Small Business Disaster Damage Fairness Act Makes collateral requirements for SBA disaster loans equivalent for all disaster types
S.2482 Community Advantage Loan Program Act of 2023


Codifies the Community Advantage Loan Program and establishes guardrails for Small Business Lending Companies

Building Bipartisan and Bicameral Momentum

Not to be overlooked, the House Small Business Committee also held a markup in July. The committee adopted eight bills, all of which received unanimous support but one. Several bills address aspects of fraud that occurred in SBA-administered pandemic relief programs and others seek to reduce regulatory compliance burdens on small businesses.

Two of the bills, H.R. 4670, the Small Business Contracting Transparency Act, and H.R. 4671, the Corrective Action Report Oversight and Accountability Act, will provide policymakers with more information to help them strengthen and expand government contracting opportunities for small businesses.

The two markups, held on back-to-back days, demonstrate the bipartisan congressional commitment to America’s entrepreneurs and small businesses. This fall, Congress is well-positioned to continue its efforts to improve and modernize SBA so that the agency can best fulfill its critical charge of “aiding, counseling, assisting, and protecting” the interests of our nation’s small businesses for years to come.

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