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In last week’s Portland Business Journal, The Playbook’s Senior Reporter Andy Medici detailed some updates for Small Business Administration loan programs which are coming on line. For example, under the Agency’s 7(a) and 504 programs, the SBA will now begin determining whether a business is eligible rather than burdening banks with that responsibility. This change will take place on August 1, 2023.

The SBA is also launching some new fraud prevention measures using data analytics, third-party data checks and A.I. tools to review loans for potential fraud. The Agency is clearly learning here from the Covid experience where some fraudulent loans were applied for and granted. These new checks will be done up front, before a loan is granted, and will also take some of the burden off lenders to perform these checks.

The SBA is also for the first time going to allow non-bank lenders to participate in the 7(a) and 504 lending programs. While this change may open up new avenues for securing capital, concerns have been expressed about opening up these programs while relaxing standards for participating lenders.

The changes come at a time when there is growing concern over a “credit crunch” – particularly for small business – due to banking industry turmoil, higher interest rates and a possible recession on the horizon.