Low-cost SBA-backed lending is critical for small business owners. Securing funding is already hard for small businesses, and minority-owned small businesses such as the 25,000 members and partners of the U.S. Minority Chamber of Commerce face unique hurdles and often turn to U.S. Small Business Administration loans as a result.
But recently, the administration proposed rules introducing sweeping changes that would make it harder for small business owners to access the capital they need to grow their businesses. This could be devastating for minority-owned businesses, especially as the number of smaller loans from the SBA continue to decline. These changes could push business owners into the hands of alternative and often predatory lenders, who can charge rates between 18 and 99 percent annually.
The SBA received over 4,000 comments on this proposed rule, which is currently under review. Many of these comments are from small-business owners — including minorities — opposing the rule because of the impact it would have on lending. The SBA’s own Office of Advocacy even submitted a letter that reflected these concerns and urged a less invasive approach to protect lending.
And in February, Sen. Marco Rubio, the new chair of the Senate Committee on Small Business and Entrepreneurship, questioned then-Small Business Administration (SBA) Administrator Linda McMahon about this proposed rule.
But SBA still shows no indication that it will listen to small-business owners and withdraw this harmful rule.
We need the House Committee on Small Business, chaired by Rep. Nydia Velazquez, to press the SBA for answers here.
Minority-owned small businesses would be among those that suffer the most by any policy change that restricts access to credit. These changes will stifle jobs and investments in our communities. Small-business owners looking for loans under $350,000 are the very businesses that SBA was created to serve.
I urge the Small Business Administration to follow through on their commitment to help truly small businesses secure funding, particularly minority-owned businesses who face increased barriers to credit, by rejecting this proposed rule.
Mayorga is the president and CEO of the U.S. Minority Chamber of Commerce, a nonpartisan, nonprofit organization with over 25,000 companies and partners.