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    Louisiana US Senators Concerned Over $4.5B SBA Loan Proposal – New Orleans, Louisiana

    New Orleans, Louisiana 2021-10-14 00:11:03 –

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    Two senators from Baton Rouge-Louisiana have expressed concern about the proposed $ 3.5 trillion parliamentary budget adjustment bill, which would allocate billions of dollars of direct government loans to SMEs.

    Louisiana Republicans John Kennedy and Bill Cassidy called the plan “inefficient, costly, and unfair,” with 13 other senators. letter It was addressed to the leaders of the US House of Representatives and the Senate and the chairs of the Small Business Committees of both Houses.

    Section 100502, or a clause known as Credit Enhancement Financing and Small Dollar Loan Financing, is about 4.5 billion in 10 years for the US Small Business Administration (SBA) to issue 7 (a) loans directly. Approve the dollar.

    7 (a) Loan program Eligible borrowers provide up to $ 5 million for use in real estate, short-term and long-term working capital, current business debt refinancing, and “furniture, fixtures, fixtures.”

    The main concern raised by the opposition Senator is related to taxpayer accountability. Including private banking lenders in the SBA’s lending process involves built-in financial oversight, but direct government lending leads to abuse, they said.

    “It is irrelevant to aim to increase 7 (a) lending in the hands of SMEs by providing SBA with $ 4.5 billion to implement its own lending program,” the letter read. .. “Without the right parameters, direct lending programs can be subject to mass fraud and abuse.”

    The letter quoted the SBA Inspector General’s office report It shows that the government-run Economic Injury and Disaster Loan (EIDL) program has dealt with potentially fraudulent loans and has moved $ 79 billion ahead of schedule.

    OIG was warned about the potential fraud problem of a direct government lending program when a private financial institution reported a warning signal when it received a loan deposit.

    “We received more than 5,000 suspected fraud complaints from financial institutions receiving financial injury loan deposits,” said the OIG report.

    Coincidentally, the day after Senator’s October 6 letter, the SBA inspector was another. report It shows that the EIDL program has paid more than $ 4.5 billion on “illogical” small business bills.

    OIG mistakenly receives taxpayer-funded subsidies based on claims that 700,000 applicants claiming to be sole proprietors and independent contractors have employed as many as 1 million employees I found that. According to OIG, the required taxpayer number has not been submitted either.

    “The SBA has approved thousands of grants for under-scrutinized applications due to lack of management systems to flag applications with flawed or illogical information.” The report concluded.

    “Compare this to the Paycheck Protection Program (PPP). The Paycheck Protection Program (PPP) has identified a potential fraud of $ 4.6 billion,” Senator said, servicing 12 million loans. Described the CARES Law Loan Program involving 5,467 private lenders. “Of the $ 800 billion of the program as a whole, that’s only 0.6% of the total.”

    The proposed SBA 7 (a) loan clause is included in the $ 25 billion SME package and is itself incorporated into the budget adjustment proposal on page 2,465.

    Nidia Velázquez (DN.Y.), chairman of the House Small Business Committee, said that when she passed the committee in September, funding packages were important to move the U.S. economy beyond the COVID-19 pandemic. I said there is.

    “SMEs are the foundation of our economy and ultimately the key to a full economic recovery for our country,” Velázquez said. “The SME policy we are advancing today represents a generational investment in American entrepreneurs, helping companies recover from COVID now and prosper in the future.”

    The Consumer Bankers Association, a retail banking group affiliated with all 50 states, argues that direct 7 (a) lending may result in a shortage of private lenders due to the good loan terms of the SBA. ..

    so letter Richard Hunt, CBA President and CEO, told Congress: Over the years, we have been able to offer 7 (a) loans. “

    Hunt has highlighted a compromise that includes increased access to government support for very small businesses.

    “Perhaps a more constructive policy would be for Congress to consider continuing the provisions of the CARES Act to strengthen lending in 7 (a), including a 100% loan guarantee for loans under $ 150,000. “Hunt said.

    By William Patrick of Center Square

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