Risch, Crapo, Scott Introduce Bill To Stop Government Overreach In Small Business Lending

BOISE, Idaho - U.S. Senators Jim Risch (R-Idaho), Mike Crapo (R-Idaho), and Tim Scott (R-S.C.) introduced the Protecting Access to Credit for Small Businesses Act to block a Biden-era rule that forced community banks and credit unions to compete against the federal government when issuing loans to small businesses.

The legislation would preserve the Small Business Administration (SBA)'s traditional lending model, allowing private financial institutions' to more effectively support local entrepreneurs.

"Access to capital remains one of the biggest challenges small businesses face," said Risch. "The Protecting Access to Credit for Small Businesses Act stops the federal government from getting involved in a process private lenders have handled well for years, allowing small businesses to thrive without bureaucratic roadblocks."

"Inserting the heavy hand of the federal government into a role community banks and credit unions already serve is redundant and wasteful," said Crapo. "We can rely on our private institutions to help small businesses access capital without putting them in direct competition with the federal government."

"The SBA has a poor track record as a direct lender, especially compared to local banks that know the communities they serve," said Scott. "Allowing the SBA to directly offer loans is not just another example of government overreach, it would also hurt Main Street by creating unnecessary competition with community banks and credit unions. The private sector has a much stronger record of managing loans effectively, and the last thing we need is big government disrupting a system that local businesses rely on."

Risch, Crapo, and Scott are joined by U.S. Senators John Barrasso (R-Wyo.), Ted Budd (R-N.C.), Kevin Cramer (R-N.D.), Steve Daines (R-Mont.), Cindy Hyde-Smith (R-Miss.), and Rick Scott (R-Fla.) in introducing the Protecting Access to Credit for Small Businesses Act.

Background

1. President Biden's fiscal year 2025 budget included a proposal that allows the SBA to directly make loans under the 7(a) lending program.
2. The SBA has a history of performing poorly in lending programs compared to the private sector.
   1. According to the SBA Office of Inspector's 2023 report, the government-led COVID-19 Economic Injury Disaster Loan program found $136 billion in potential fraud (33% of total funds disbursed). In contrast, the private-sector-led Paycheck Protection Program had $64 billion (8% of funds disbursed).

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