Republicans unveil small business administration reform legislation to combat 'fraud, mismanagement' of agency
The IMPROVE the SBA Act would prohibit direct government lending on certain loan programs
Job Creators chief communications officer reacts to a Congressional proposal that would take away money already allocated for small business and put it towards COVID response funding.
EXCLUSIVE: The Small Business Administration (SBA) needs to root out fraud, boost private-sector lending and help rural entrepreneurs, according to Republicans on the House Committee on Small Business.
Republicans introduced new legislation Wednesday that calls for reforms at the Small Business Administration (SBA), the federal agency solely dedicated to helping small businesses.
"To combat the fraud, mismanagement, and burdensome regulations and policies, I introduced the IMPROVE the SBA Act," Rep. Blaine Luetkemeyer, R-Mo., said in a statement to Fox News Digital. "This legislation will provide much-needed oversight over the Small Business Administration, enhance private-sector lending, empower entrepreneurs through counseling, and support small businesses in federal contracting."
The SBA took on a big role during the coronavirus pandemic to dole out billions of dollars of COVID-19 relief funds to businesses through programs like the Paycheck Protection Program (PPP), which was delivered to small businesses through private sector lenders, and the SBA’s Economic Injury Disaster Loan (EIDL) program, which was a direct loan program through the SBA.
While those programs served as a vital lifeline to businesses during periods of shutdowns, the programs were also marred with fraud, improper payments and identity theft, according to investigators.
Isabella Casillas Guzman attends a Senate Small Business and Entrepreneurship confirmation hearing on her nomination to be Administrator of the Small Business Administration, on Capitol Hill in Washington. (Tasos Katopodis/Pool Photo via AP, File / AP Newsroom)
The Republican takeaway from the COVID-19 relief efforts was that the EIDL direct lending program suffered from disparate underwriting controls and a lack of oversight metrics compared to the PPP private sector lender program. Many GOP members concluded that SBA should not be involved in direct lending.
Under the IMPROVE act, the SBA would no longer be the direct lender for the disaster loan program or for the 7(a) Loan program, the agency's most common financial assistance program to small businesses. Private sector banks and credit unions would take on that responsibility.
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"We have discovered the agency’s programs have been fraught with fraud, delays, and mismanagement," Luetkemeyer, the top Republican on the Small Business Committee, said. "Most alarming, despite the fraud within the direct Economic Injury Disaster Loan (EIDL) program, the SBA and the federal government continues to push our lending programs into sole government control – etching out private-sector lenders."
Rep. Blaine Luetkemeyer, R-Mo., leaves the House Republican Conference meeting at the Capitol Hill Club in Washington on Wednesday morning, June 13, 2018. (Bill Clark/CQ Roll Call / Getty Images)
To improve oversight, the proposed legislation would require the SBA administrator to testify more before Congress and the SBA would be held accountable for implementing recommendations made by auditors and inspectors general to fix problems identified at the agency.
The legislation would prohibit certain businesses from having access to SBA funds, including Planned Parenthood, those primarily engaged in government lobbying and those that have a principal place of business in China or owned by a Chinese entity.
Republicans also want to end special preferences, and administer capital and counseling programs on a first-come, first served basis. They say Democrats are too focused on enhancing opportunities for only minority-owned businesses. The GOP bill would direct the SBA to make recommendations and evaluate ways to better help rural small businesses.
Representative Blaine Luetkemeyer (R-MO) (Sarah Silbiger-Pool/Getty Images / Getty Images)
The legislation has little pathway forward with Democrats in control of the House, but Republicans want to lay out the GOP version of a better SBA should they win back Congress in November. Luetkemeyer says this vision represents "efficient and responsible policymaking."
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All Republican members of the House Committee on Small Business have sponsored the IMPROVE the SBA Act, including GOP Reps. Roger Williams of Texas, Dan Meuser of Pennsylvania, Young Kim of California, Beth Van Duyne of Texas, Claudia Tenney of New York, Maria Salazar of Florida, Pete Stauber of Minnesota, Andrew Garbarino of New York, Scott Fitzgerald of Wisconsin and Byron Donalds of Florida.