Senator Sherrod Brown

WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) today urged the Small Business Administration (SBA) to improve access to credit for small businesses in Ohio and across the country by adjusting the SBA’s debt refinancing guidelines. In a letter to SBA Administrator Karen G. Mills, Brown asked for support to increase loan flexibility, which would expand refinancing options for lenders. 

“It is critical that we give small businesses all the necessary tools to survive these difficult times,” Brown wrote in his letter. “ Updating refinancing regulations will make credit more accessible to small businesses, while assuring that the refinancing is appropriate to borrowers’ circumstances and that SBA is not taking on the risk of a loan with little chance of full repayment.”

Brown has been an outspoken advocate in Congress on the necessity of improving lines of capital to Ohio small businesses. As chair of the U.S. Senate Banking Subcommittee on Economic Policy, Brown held a hearing last month entitled “Restoring Credit to Manufacturers,” which featured expert testimony from the manufacturing and banking sectors to investigate ways to reverse the credit crisis. Brown also recently introduced the Small Business Emergency Loan Relief Act which would temporarily raise maximum loan amounts for small business loans. The legislation builds upon the success of SBA lending through the American Recovery and Reinvestment Act of 2009 (ARRA). Since the passage of the recovery legislation, Brown has been working to connect Ohio small businesses with federal resources. Earlier this year, Brown held a series of forums connecting more than 1,000 Ohio small businesses with federal officials from the SBA.

A full copy of Brown’s letter can be found below.

Administrator Karen G. Mills
United States Small Business Administration
Washington, D.C. 

Dear Administrator Mills:

I am writing to urge your support of changes to the debt refinancing rules governing the Small Business Administration’s loan programs.  I have heard from a number of small businesses in Ohio that have had difficulties refinancing existing loans, primarily due to current economic conditions.

I am aware that SBA’s regulations allow refinancing of existing debts through 7(a) loans, but I understand that those rules make it difficult for lenders to provide financing in some cases.  This is particularly true when the debt being refinanced is with the same lender, because SBA will only allow refinancing when the debt has been current for the last 36 months or when SBA’s Director of the Office of Financial Assistance approves an exception [SOP 50 10 5(B), ch. 2(IV)(D)(5)].

I am pleased with the SBA’s response to the challenges facing America’s small businesses, but there is more that should be done.  Specifically, I would suggest issuing a notice to amend loan processing guidelines to provide greater flexibility when a loan will be used to refinance a lender’s existing debt, even if the borrower has had limited problems making monthly payments.  I recommend that the authority to approve such loans be delegated to the SBA regular loan processing center without requiring a policy exception from the head of the 7(a) program.

It is critical that we give small businesses all the necessary tools to survive these difficult times.  Updating refinancing regulations will make credit more accessible to small businesses, while assuring that the refinancing is appropriate to borrowers’ circumstances and that SBA is not taking on the risk of a loan with little chance of full repayment.

Thank you for your consideration.

Sincerely,

Sherrod Brown
United States Senator

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