The microloan program offers small businesses up to $50,000 to help their growth and expansion — though on average, loans are usually only around $13,000. Intermediary lenders are connected with businesses through the program and help eligible borrowers.
The waivers this bill outlines would apply to the 25/75 rule that requires microlenders to spend:
- At least 75 percent of their grant funding on actual microloan borrowers.
- No more than 25 percent of grant money on up-front technical assistance and training. This can include anything from guidance on business plan development, basic accounting and record-keeping, to help with license or permit applications etc.
This bill would also increase the aggregate lending limit (i.e. the total amount of loans disbursed) for microloan intermediaries from $5 million to $6 million. The SBA would be prohibited from limiting loan repayment terms — with two exceptions:
- Loans of $10,000 or less must not have repayment terms exceeding six years,
- Loans greater than $10,000 must have a repayment period of 10 years or less.
The SBA would be authorized to extend short-term lines of credit for small businesses.
Within 120 days of this bill’s enactment, the Government Accountability Office (GAO) would have to report to the House Small Business Committee describing intermediaries who chose to participate and those who chose not to. This would include reasons why some intermediaries choose not to participate, and recommendations for boosting participation while decreasing costs for those involved in the program.
Also within 120 days of this bill’s enactment, the Chief Counsel for Advocacy of the SBA would report to the House Small Business Committee on the economic impact of a savings requirement on businesses eligible to participate in the microloan program. This report would include a cost-benefit analysis of the requirement, and recommendations on its implementation.