The U.S. Small Business Administration (SBA) today, Feb. 26, 2013, announced that it has proposed new regulations that will increase access to capital and reduce the amount of paperwork required by borrowers and lenders of SBA-backed loans. The regulation will also streamline the SBA loan application process and strengthen oversight of the agency. These proposed changes are a result of meeting with lenders and borrowers, identifying challenges and looking for ways to make borrowing and lending more accessible.
“Streamlining and simplifying has been a key focus of our agency over the last few years. The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small business owners the financial resources to grow and create jobs,” said SBA Administrator Karen Mills in a prepared statement.
Three of the proposed changes include:
- Eliminating the Personal Resource Test: As it stands now, a borrower needs to keep a certain amount of money on hand to get a 7(a) or 504 loan. Eliminating this requirement will streamline the loan process.
- Revising the Rule on Affiliation: Small businesses that affiliate with other companies often don’t qualify as small businesses under SBA rules, even though they’re still small businesses. The revised rule will open up access to SBA loans to these small businesses as well as streamline 504 loan applications and reduce paperwork for 504 and 7(a) loan applications.
- Eliminating the Nine-Month Rule for the 504 Loan Program: Businesses currently are limited to including only the last nine months of expenses in their 504 loan applications. Eliminating this rule allows small businesses to include expenses incurred at any time, including for projects halted by disaster for more than nine months.