U.S. Senator Ted Budd (R-N.C.) has joined Senator Tim Scott (R-S.C.) and several colleagues in reintroducing the Protecting Access to Credit for Small Businesses Act. The legislation aims to prevent the federal government from competing with community banks and credit unions by prohibiting a rule from the Biden administration that allows the Small Business Administration (SBA) to make direct loans.
“Time and again, the federal government has shown it is neither efficient nor effective when it comes to delivering direct loan support to small businesses. Community banks and credit unions, not Washington bureaucrats, understand the needs of the businesses they serve. It’s time we stop sidelining them. I am proud to join Senator Scott and my colleagues to put power back in the hands of local institutions that invest in our communities, rather than forcing them to compete with the federal government,” said Senator Budd.
Senator Scott echoed these concerns: “The SBA has a poor track record as a direct lender, especially compared to local banks that know the communities they serve. Allowing the SBA to directly offer loans is not just another example of government overreach, it would also hurt Main Street by creating unnecessary competition with community banks and credit unions. The private sector has a much stronger record of managing loans effectively, and the last thing we need is big government disrupting a system that local businesses rely on.”
Other senators supporting this bill include John Barrasso (R-Wyo.), Kevin Cramer (R-N.D.), Mike Crapo (R-Idaho), Steve Daines (R-Mont.), Cindy Hyde-Smith (R-Miss.), James Risch (R-Idaho), and Rick Scott (R-Fla.).
The proposed legislation has received backing from organizations such as the American Bankers Association, America’s Credit Unions, Bank Policy Institute, Carolinas Credit Union League, Consumer Bankers Association, Independent Community Bankers of America, and South Carolina Bankers Association.
President Biden’s fiscal year 2025 budget includes a proposal allowing the SBA to directly issue loans under its 7(a) lending program. The SBA’s performance as a direct lender has been criticized when compared with private sector efforts. According to an SBA Office of Inspector General report in 2023, there was $136 billion in potential fraud—33 percent of total funds disbursed—in the COVID-19 Economic Injury Disaster Loan program managed by the government. By contrast, private-sector-led programs like Paycheck Protection Program saw $64 billion or about 8 percent of funds disbursed potentially lost due to fraud.
