SBA Loans More Attainable After House Passes Microloan Improvement Act
The U.S. House of Representatives passed the Microloan Improvement Act to enhance access for small businesses to SBA loans and help them weather the economic fallout from the COVID-19 crisis. The act was passed by an overwhelming majority of 397 to 16.
The bill was introduced by Congressmen Andy Kim and Tim Burchett and co-sponsored by two other lawmakers. It increases the number of nonprofit, community-based lenders that will get low-interest rate loans from the SBA and extend these in the form of lines of credit to small businesses with the maximum repayment term.
Many small businesses don’t have the credit history to meet the extensive requirements for SBA loans. This act gives businesses that weren’t eligible for loans under SBA’s rules the opportunity to receive the much-needed funds.
“We need to do everything we can to help our small businesses in this critical time,” Congressman Kim said. For his part, Burchett exclaimed that he was “proud to be a part of this effort that will help aspiring small business owners and entrepreneurs chase down the American Dream.”
Congress established SBA’s Microloan Program back in 1991 to provide the funds to underserved entrepreneurs through community-based lenders. It’s now one of the best solutions to help small businesses avoid closures, along with crowdfunding platforms and other alternative routes that small businesses could take.
Aside from the aforementioned bill, the House also passed the Microloan Transparency and Accountability Act, which is meant to deliver microloans to rural areas, offering a 5% technical assistance grant for institutions that work with small businesses. 25% of all loans must go to such companies for lenders to be eligible for this 5% grant. The SBA is also required to provide Congress with an annual Portfolio Risk Analysis of microloans to prevent fraud and government waste.