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SBA suggests 7a compliance changes
WASHINGTON (5/27/11)--The U.S. Small Business Administration (SBA) has identified the adoption of a single electronic application for all SBA 7(a) guaranteed loans as one of several ways it could reduce compliance burdens. This 7(a) streamlining would, according to the SBA, “reduce the paperwork burden on lenders” and increase the participation of credit unions and other lenders in the 7(a) program. It would also improve the timeliness of loan approval deliveries, the SBA added. The SBA also discussed allowing credit unions and other SBA lending partners to use an automated credit decision model for 7(a) loans of less than $250,000. Doing so could reduce the cost of delivering loans to eligible borrowers, thus expanding lender interest in making low-dollar loans. This change could also encourage new credit unions and other lenders to become SBA partners, increasing the amount of lending options for small businesses, the SBA added. The SBA was one of 30 federal agencies that this week released a regulatory review following an early 2011 executive order calling on federal agencies to design cost-effective, evidence-based regulations that are compatible with economic growth, job creation, and competitiveness. The Obama administration also instructed regulators to reduce burdens on small businesses whenever possible, called for greater transparency and accountability in regulatory compliance, and requested that regulators identify areas where regulations could be effectively harmonized to reduce costs. The SBA said it would also explore whether adding greater flexibility to its lending criteria and increasing the participation of lenders and borrowers in underserved communities could “reduce federal barriers” for entrepreneurs working to start and grow their own businesses. The SBA added that it would soon report on the feasibility of these and other ideas. For the full SBA release, use the resource link.
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