The Small Business Administration (SBA) continues to focus its regulatory efforts towards delivering sound economic development programs to small businesses through streamlined, customer-oriented regulations.
SBA began its efforts to streamline SBA regulations in 1994 in response to a Presidential directive to all agencies to review, revise and eliminate regulations. SBA followed the directive, thoroughly reviewed all regulations and, by 1996, revised the bulk of SBA's regulations. The revised regulations are less burdensome, more ``user-friendly'' and provide for more efficient operations. The regulations incorporate SBA's mission to ensure access to capital to our nation's small businesses.
SBA's 1999 Regulatory Plan
Section 7(a) of the Small Business Act states that SBA may provide financing to small businesses ``directly or in cooperation with banks or other financial institutions.'' Today, SBA guarantees loans through approximately 7,000 lenders. Of these lenders, fourteen currently are Small Business Lending Companies (SBLCs) that are not otherwise regulated by Federal or state chartering, licensing, or similar regulatory control. SBA examines or audits these SBLCs periodically.
In view of SBA's desire to manage its guaranteed loan portfolio more effectively, along with recent increases in loan volume, SBA expects to increase its SBLC oversight. To that end, SBA continues to draft regulations that govern the oversight and operation of the SBLC Program.
SBA's 2000 Regulatory Plan
Small Business Lending Company Oversight Regulations
As discussed earlier as part of SBA's 1999 Regulatory Plan, SBA's drafting process with regard to the SBLC program continues.
Business Loan Programs -- Multi-Lender Securitizations
Also, SBA seeks to allow small volume SBA Lenders to get less costly means of financing their small business loan-making while protecting the safety and soundness of the 7(a) program. SBA is drafting a rule to aid in such cost savings. The rule is intended to level the playing field between large and small volume Lenders and will have a long-term benefit of increasing the number of small business loans.
Business Loan Program: Modifications to CDC Operations
Another important change to an SBA loan program will be a new rule modifying the operating rules applicable to certified development companies (CDCs). There are currently approximately 270 active CDCs. In 1998, CDCs made approximately four thousand 504 loans to small businesses. SBA will publish a proposed rule to allow active CDCs to service locations that do not receive adequate 504 loans. SBA hopes that this will encourage active CDCs to provide 504 services to underserved areas. Thus, additional small businesses and the local economies in which they operate will benefit.
New Markets Venture Capital Program
This fall, SBA believes that a bill based on a Presidential initiative designed to bring small business economic growth to previously underserved areas (``new markets'') will be introduced in Congress. SBA expects to issue regulations based on this bill when and if it is enacted into law. The regulations would implement the New Markets Venture Capital Program, which would help spur economic development in some of America's under-invested communities. The rule would initiate a public-private partnership encouraging venture capital investing and intensive technical assistance to small businesses in low and moderate income areas.
Local Economic Development and For-Profit CDCs
Finally, SBA`s Office of Financial Assistance plans to publish a ``Notice of Intent'' to develop a regulation to better define the term ``local economic development'' and the organizational and program requirements CDCs must satisfy to comply with this concept. As part of this rulemaking, for-profit CDCs' organizational requirements will be dealt with specifically to ensure that they comply with Congressional intent for the program.