On March 29, the House Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access held a hearing entitled, “Catalyzing Economic Growth through Small Business Administration’s (SBA) Community-Based Lending.” Policymakers discussed community-based lenders and small banks’ relationships with COVID-19 relief efforts and existing SBA programs. Among the hearing’s witnesses was Kerry Doi, president and CEO of OFN member Pacific Asian Consortium in Employment (PACE).
In his testimony, Doi discussed the importance of the SBA’s Microloan program and endorsed two bills:
- H.R.1502, the Microloan Improvement Act of 2021, which would increase the number of nonprofit, community-based lenders eligible for the lowest interest rate on loans from the SBA; it would also allow these lenders to offer lines of credit to small businesses while extending the maximum repayment term for loans
- H.R.1487, the Microloan Transparency and Accountability Act of 2021, which requires the SBA to report certain metrics related to the disbursement of microloans and aims to enhance microloans in rural areas
Subcommittee Chair Sharice Davids (D-KS) joined the hearing and highlighted the importance of the SBA’s Paycheck Protection Program (PPP) and its support for small firms during the pandemic. Rep. Davids noted that while PPP closed in May 2021, community lenders should continue to be considered a vital tool for ensuring an equitable economic recovery. She further noted that many of the community-based lenders that helped to serve businesses with PPP loans are already active in existing SBA lending programs, including the CDC/504 loan program, Microloan program, and Community Advantage (CA) pilot program. Rep. Davids urged Congress to strengthen these programs by utilizing community lenders to ensure all businesses have access to capital during this recovery period.
Rep. Judy Chu (D-CA) discussed the significance of raising the loan cap on the CA pilot program from $250,000 to $350,000 and the benefits it will hold for the smallest businesses. Doi agreed that lifting the cap on CA loans will help firms grow from micro-level to regular-sized businesses. Rep. Chu also applauded PACE for supporting immigrants and refugees with starting their small businesses by providing them with technical assistance and social services counseling, in addition to access to capital.
Rep. Carolyn Bourdeaux (D-GA) called attention to the challenges of technical assistance during the earlier stages of the PPP loan initiative for the smallest borrowers. Among other witnesses, Doi illustrated the need for more federal resources to be dedicated to technical assistance, especially relating to community-based lenders operating with language barriers. Doi underscored the significance of the Biden-Harris Administration’s recent Executive Order on “Advancing Equity and Opportunity for Asian American, Native Hawaiian, and Pacific Islander Communities,” which calls for expanded language access and assistance in federal resources.
This hearing comes at a time when the SBA is working to modernize its programs to increase support for community-based lenders such as CDFIs. In the same week, Vice President Harris and SBA Administrator Isabella Guzman announced changes to the CA program as a result of unprecedented stakeholder engagement from the SBA’s Office of Capital Access and small business lenders from OFN’s network. Learn more about the CA pilot program changes.
OFN is pleased to see the House Small Business Committee’s continued focus on highlighting the significant role of community-based lenders and CDFIs in catalyzing economic growth for our economy.