Proposed Rules Will Substantially Increase Access to Capital for Small and Minority-Owned Businesses
Washington DC – November 4, 2022 – The Innovative Lending Platform Association (ILPA) today applauded the Biden Administration’s Notice of Proposed Rulemaking to lift a 1982 Small Business Administration (SBA) moratorium on issuing new Small Business Lending Company (SBLC) licenses. The proposed rule, published in the Federal Register today, announced a new public and private sector effort to advance racial equality and improve small business access to capital. It would allow ILPA members and other regulated non-bank lenders including Fintech and CDFIs to originate 7(a) loans – SBA’s flagship SMB government guarantee loan program – nationwide.
The announcement follows research from the Bank for International Settlements (BIS) and the Federal Reserve Bank of Philadelphia that found Fintech lenders expand credit access to underserved small business owners who are not likely to receive funding from traditional lenders. The research also found that Fintechs are doing so at a lower cost and can predict future loan performance more accurately than the conventional method of credit scoring, leading to better loan performance.
“ILPA applauds the Biden Administration, Senator Tim Scott (R-SC), Senator John Hickenlooper (D-CO), Representative Byron Donalds (R-FL), and Representative Jason Crow (D-CO) for their support and leadership on this important issue,” said Scott Stewart, CEO of the Innovative Lending Platform Association. “We were proud to support the bipartisan, bicameral Expanding Access to Affordable Credit for Small Businesses Act and will continue to support policies at the state and federal level that expand access to credit and financing options for America’s smallest and minority-owned businesses.”
Additionally, the SBA proposed new rules to modernize the 7(a) program by streamlining and reducing regulatory burdens to facilitate robust participation in the business loan programs that assist small and underserved U.S. businesses.
About ILPA
ILPA is the primary trade organization for online financing and service companies serving small businesses. Members provide hundreds of thousands of small businesses with working capital to purchase inventory, hire additional hands for the busy season, expand the business, or repair damaged or outdated equipment. This capital comes from various financing products, including term loans, lines of credit, purchase of future receivables, and factoring. Our members include Biz2Credit, BlueVine, FundBox, Funding Circle, Kabbage, Lendio, Mulligan Funding, OnDeck, and Paynet.