Velázquez Weighs in on Small Business Regulatory Proposals

Washington, D.C.— As the Small Business Administration (SBA) considers public feedback on its sweeping set of proposed lending regulations, the top Democrat on the House Small Business Committee, Rep. Nydia M. Velázquez (D-NY) weighed in on the guidance.

Most concerning to Velazquez was a provision preventing loans for employee-owned business models from being processed under a lender’s delegated authority. In objecting to the language, she cautioned that the SBA’s proposed rule runs counter to the Congressional intent of the Main Street Employee Ownership Act by placing unnecessary barriers on employee-owned businesses in accessing SBA loans. 

“After witnessing the success of local co-operative businesses in my district in New York City, I believe that we must ensure similar business models across the country have the capital they need to flourish,” said Velázquez. “For this reason, I was proud to join Senator Gillibrand in passing legislation to help employee-owned enterprises better utilize the SBA’s capital access programs. Unfortunately, as currently written, the SBA’s proposed rule would create unnecessary red tape by slowing the path to capital. I strongly urge the SBA to amend this proposed rule and help employee-owned businesses secure the capital they need to succeed.” 

Also included in her comments, Velázquez encouraged the SBA to simplify definitions in the personal resources test to reduce confusion and pressed for more information on agent fee caps, specifically to guard against unintended consequences. She also applauded the SBA for proposing to reinstitute the affiliation rules for 7(a) loan eligibility but advised the SBA to go one step further to include greater safeguards for small borrowers.

“Breaking down barriers to capital by strengthening the SBA’s lending programs is key to helping America’s diverse small business owners stock their shelves, create new jobs and expand their operations,” said Velázquez. “It is my hope that Administrator McMahon will consider the feedback I have outlined as the agency seeks to finalize these proposed rules so that small business borrowers, including employee-owned businesses, have the tools they need to succeed.”

To read Ranking Member Velázquez’s comments in full, you can find a PDF here.

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