CUNA Witness Calls SBA Documentation, Fees Prohibitive

WASHINGTON — (3-8-2007) Actors Federal Credit Union CEO Jeff Rodman told members of the House Small Business Committee today that fees passed through to borrowers under SBA’s 7(a) zero-subsidy program are prohibitive, as well as the documentation procedures.

While the zero-subsidy funding of SBA loans has provided stability to the program, the fees that are passed on to the borrowers can make them think twice, he said. Small to mid-sized 7(a) loans can bring fees ranging from $1,500 to $3,000. “That is significant to the borrower,” Rodman told Credit Union Times. “How much inventory is that?”

Additionally, the money to hire someone with the necessary expertise may not be worth the loans to be made, given the credit unions’ member business lending cap of 12.25% of assets. While Actors does offer business loans, it does not participate in SBA because, Rodman explained to committee members, hiring someone at approximately $70,000 for the few SBA loans a credit union will be able to do may not make sense. (CU Times)