Palmetto State News

U.S. Senators Tim Scott and John Kennedy, along with 11 of their Republican colleagues, have introduced the Protecting Access to Credit for Small Businesses Act to prevent the Biden administration from implementing a plan to have the Small Business Administration (SBA) become a direct lender. Senator Scott expressed concerns about the administration’s proposal, stating, “When acting as a direct lender, the SBA has a consistent history of failure and inefficiency when compared to the private sector.” He added, “There’s simply no reason to use the federal government to funnel tax dollars that will later be loaned back to small businesses.”

Senator Kennedy also criticized the SBA's history in direct lending, saying, “Fraud and inefficiency characterize the Small Business Administration’s history in direct lending. The government shouldn’t crowd out private lenders that are already doing a good job getting funds to the small businesses that need them.” He emphasized the importance of preventing the SBA from replacing private lenders and community institutions with government bureaucrats.

The bill, cosponsored by several other Republican senators, aims to challenge President Biden’s proposal to allow the SBA to directly make loans under the 7(a) lending program. This move comes in response to concerns about the SBA's past performance in lending programs compared to the private sector. Senator Scott has been vocal in opposing federal overreach into direct lending space, including pushing back on the Biden administration’s initiatives.

The legislation has garnered support from various industry organizations, including the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, Bank Policy Institute, America’s Credit Unions, and South Carolina Bankers Association.