Republican lawmakers on Wednesday slammed Democratic leaders for including a provision in their Comprehensive Reconciliation Bill for allocating billions directly to small business administrations and criticized it as an “expensive” way to get credit into the hands of small businesses.
In a letter to Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi, the 15 GOP senators, led by Sen. Tim Scott of South Carolina, sounded the alarm about the authorization of about 4.5 billion over the next decade to issue directly to the SBA.2.8 billion for 504 loans in the popular 7 (a) debt and the Democrats’ $ 3.5 trillion tax and spending bill.
Under these measures, small business owners will be able to go directly to SBA to access capital instead of private lenders and banks.
“We believe this would be an inefficient, costly and unequal position to keep both lenders and borrowers,” the Republican wrote in the letter, which is also addressed to the Democratic Small Business President.
GOP members noted that there was a big difference in the issuance of paycheck protection program loans, which were administered by banks and other private entities, and financial injury disaster loans handled by SBA.
For example, in fiscal year 2020, the SBA approved 42,402 7 (a) loans of about .6 22.6 billion through 1,673 lending partners, in addition to 12 million PPP loans of about 800 800 billion through 5,467 different lenders. Republicans hailed the partnership between SBA and private lenders as “massively successful” in raising money for small businesses struggling with the epidemic.
But he pointed to the high rate of fraud in SIBA’s direct handling of EIDL debt: the SBA inspector general recently uncovered $ 78.1 billion in potential fraudulent EIDL activities; At the same time, the SBA had, by mid-September, disbursed $ 290 billion in Covid-19 EIDL loans and grants अर्थ meaning the fraud rate could be up to 30%.
By comparison, the potential fraud rate for PPP loans is approximately 4.6%. The senators noted that while PPP loans depended on banks, credit unions, fintech and other private sector lenders, the EIDL program was run entirely by the government.
“This misguided liberal scheme will collect taxes from small business owners, and then return them with interest,” Scott said in a statement to Fox Business. “It doesn’t make sense. The private sector is more efficient than the big government running these programs. It’s just another part of the Democrats’ grand plan to control every aspect of American government life.”
Democrats have argued that the measure is to help small business founders who were “left behind” by the PPP – an important lifeline in times of crisis – because they lacked banking ties or their banks preferred larger, more lucrative loans.
But Republicans opposed the Reconciliation Bill instead of increasing the lender pool in program 7 (a) – giving borrowers more options – instead of “giving SBA a state to run its own loan program” which could make it more difficult for “existing” lenders and potential lenders to join the program. Want to be. “
“As the United States emerges from the Covid-1 pandemic epidemic, the growth of small businesses and entrepreneurship must be a top priority,” the letter said. “Unfortunately, under the Reconciliation Act currently under consideration, among other provisions, allowing SBA to establish and operate a lending program that it controls would be detrimental to job creators and to the detriment of the entire United States.”
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