Actually, the Latest SBA Changes Are Good

Yes, says Ami Kassar, getting an SBA loan will be more difficult, but the long-term viability of the agency will be protected.

Good Morning!

Here are today’s highlights:

• The Chamber of Commerce has asked President Trump to exempt small businesses from his tariffs.

• The closing of the de minimis loophole may be devastating for small, online sellers.

• A company called Rent the Chicken will set you up with backyard-chickens.

• Robert Douglas opened a restaurant to hang out with friends and wound up creating a chain of retail shops.

FINANCE

Big changes are coming to the SBA. Ami Kassar says that’s a good thing: “As I have written before and as I testified before Congress, significant changes were made to the SBA during the Biden Administration, which strove to open up SBA lending as much as possible. They did this by removing guardrails from the program to make it easier for lenders to make loans and by reducing fees to make loans more affordable. These changes quickly brought challenges. For example, the lower costs and the increased defaults resulted in the SBA turning cash-flow negative for the first time in 14 years. That was not sustainable. Many of the changes made during the Biden era are now being reversed.”

• “When you evaluate these changes and see that fees have come back and underwriting standards are tougher and down-payment requirements are stricter, you might, on one hand, think that this is not good news for small businesses. But I encourage you to think long term. If the SBA starts running in the red regularly, costing taxpayers money, there may not be an SBA around to help any of us.”

• “During the Biden Administration, all fees were waived on SBA loans of less than $1 million. These fees have now returned to what they were before the Biden administration. Fees on loans of more than $1 million were not changed during the Biden Administration, and they remain the same. All of these fees can be added to the loan amount and amortized.”

• “Beginning June 1, the SBA will require anyone looking to borrow money to start or buy a business to invest at least 10 percent of the total project cost. So, as an example, if the need is $1 million, the lender would put up $900,000. In other words, the borrower needs to have some skin in the game.”

• “One of the first changes the Trump administration made after taking over was to require that any company getting an SBA loan be 100 percent owned by U.S. citizens, lawful permanent residents, or U.S. Nationals. Previously, businesses had to be just 51 percent owned by U.S. citizens. This is the only change that, in my opinion, is driven more by politics than by business considerations.” READ MORE

THE TRADE WARS

The Chamber of Commerce has asked President Trump to exempt small businesses from his tariffs: “The U.S. Chamber of Commerce is urging the Trump administration to immediately implement a ‘tariff exclusion process’ in order to keep the U.S. economy from falling into a recession and inflicting ‘irreparable harm’ on small businesses. In a letter first obtained by CNBC, the massive business lobbying group asked key Trump trade officials to automatically lift tariffs on all small business importers and on all products that ‘cannot be produced in the U.S.’ or are not domestically available.”