The Honorable Kelly L. Loeffler, Administrator, U.S. Small Business Administration (February 20, 2025)

Summary

Letter dated February 20, 2025 from the House Committee on Small Business, with Roger Williams as Chairman, to Administrator Kelly L. Loeffler, congratulating the Administrator on being confirmed as the Small Business Administration's (SBA) 28th Administrator. Its headings include Electioneering, Guardrails removed from loan programs, and Unwilling and unable to recoup funds from COVID fraud. The letter states that approximately $200 billion went to potentially fraudulent recipients across the SBA's COVID-19 Lending programs, and that the SBA took over 18 months to reverse a 2022 decision to suspend collection on delinquent COVID-19 Economic Injury Disaster Loans and Paycheck Protection Program loans valued at $100,000 or less. The closing pages list signature lines for Committee on Small Business members.

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Issuer: Congressional materials
Document type: 407147 2025 02 20 Chairman Williams Leads Congratulatory Letter To S Att0
Date: 2025-02-20
Case: 407147 2025 02 20 Chairman Williams Leads Congratulatory Letter To S Att0

Cite this document

“The Honorable Kelly L. Loeffler, Administrator, U.S. Small Business Administration (February 20, 2025).” Dated 2025-02-20. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-02-20-407147-2025-02-20-chairman-williams-leads-congratulatory-letter-to-s-att0/, SHA-256 5bea7218bbe728d627b079baa60fca39d84f02ffe77867ea07400494cb101320.

Full text

February 20, 2025

The Honorable Kelly L. Loeffler
Administrator
U.S. Small Business Administration
409 3rd Street SW
Washington, DC 20416

Dear Administrator Loeffler:

The House Committee on Small Business (Committee) congratulates you on being
confirmed as the Small Business Administration’s (SBA) 28th Administrator. As Chairman of the
Committee, I am confident that under your leadership, the SBA will become more efficient and
return to its core mission of serving Main Street America. To that end, I would like to bring to
your attention numerous issues identified at the SBA during the Biden-Harris Administration that
threatened taxpayer dollars, harmed small businesses, and moved the SBA further away from its
duty to assist America’s small businesses.

Electioneering

In 2024, the SBA entered into a Memorandum of Understanding (MOU) with the
Michigan Department of State which allowed the SBA to register voters at its events in Michigan
and from the SBA’s website.1 Despite numerous requests and multiple subpoenas, former
Administrator Guzman and the Biden-Harris SBA were persistently unable or unwilling to
provide the Committee with the information requested.2 While President Trump’s rescission of
Executive Order 14019 functionally ended this practice, the Committee is still deeply troubled by
the lack of transparency from the Biden-Harris SBA and looks forward to working with you to
determine what impact this may have had on the 2024 election.

Guardrails removed from loan programs

Equally as troubling, in April 2023, the SBA issued two Final Rules titled, “Affiliation
and Lending Criteria for the SBA Business Loan Programs,” and “Small Business Lending
Company (SBLC) Moratorium Recission and Removal of the Requirement for a Loan

1
Press Release, U.S. Small Bus. Admin., SBA Administrator Guzman Announces Agency’s First-Ever Voter
Registration Agreement with Michigan Department of State (Mar. 19, 2024).
2
See Generally U.S. H. COMM. ON SMALL BUS., WEAPONIZING FEDERAL RESOURCES: INTERIM FINDINGS ON THE
SBA’S MICHIGAN VOTER REGISTRATION SCHEME (Dec. 2024) (Staff Report).
The Honorable Kelly L. Loeffler
February 20, 2025
Page 2 of 5

Authorization.”3 The changes made in these rules present an immediate threat to the health of the
SBA’s flagship 7(a) lending portfolio.

The Biden-Harris SBA removal of guardrails from the 7(a) program has already
potentially put the 7(a) portfolio, backed by taxpayer dollars, at risk. The “Affiliation and
Lending Criteria for the SBA Business Loan Programs Rule” removed the standardized
underwriting procedures for 7(a) loans.4 These prudent underwriting standards were guardrails
that had ensured programmatic integrity for decades. Unsurprisingly, according to data provided
by the Biden-Harris SBA, the Early Default Rate and 12-month Default Rate as of June 2024
were over two times higher than their respective rates just one year prior.5 It appears that the
Biden-Harris refusal to protect taxpayers from losses has compromised the integrity of the 7(a)
program.

Further, the “Small Business Lending Company (SBLC) Moratorium Recission and
Removal of the Requirement for a Loan Authorization Rule” removed the cap on the number of
SBLCs that could participate in the flagship 7(a) lending program.6 The cap that had been in
place for 40 years reflected the SBA’s maximum oversight capacity of SBLCs. However, in
2024 the SBA increased the number of SBLCs by seven, with four new SBLC licenses being
awarded less than a month before President Trump’s inauguration.7 Alarmingly, one of the
Biden-Harris SBLC awardees, Funding Circle, was granted a license despite the CEO’s
announcement that their U.S. business was shutting down due to their net operating losses,
calling into question how rigorous the SBA reviewed SBLC applications.8

The Committee remains concerned that these two rules together would lead to a
significantly riskier 7(a) loan portfolio, leaving taxpayers to foot the bill in the form of a large
subsidy. The Committee looks forward to assisting in your efforts to ensure that the SBA
programs are financially sustainable and protect taxpayers from unnecessary risk.

Unwilling and unable to recoup funds from COVID fraud

During the 118th Congress, the Committee dedicated substantial resources to
investigating waste, fraud, and abuse in the lending programs established in response to the

3
Affiliation and Lending Criteria for the SBA Business Loan Programs, 13 C.F.R. §120 (2023) ; Small Business
Lending Company Moratorium Recession and Removal of the Requirement for a Loan Authorization, 13 C.F.R.
§120 (2023).
4
Affiliation and Lending Criteria for the SBA Business Loan Programs, 13 C.F.R. §120 (2023).
5
U.S. SMALL BUS. ADMIN., FY2024 7(A) PROGRAM RISK ANALYSIS - DATA AS OF 06/30/2024 (Dec. 2, 2024) (On
file with the Committee).
6
Small Business Lending Company Moratorium Recession and Removal of the Requirement for a Loan
Authorization, 13 C.F.R. §120 (2023).
7
Press Release, U.S. Small Bus. Admin., SBA Strengthens Lending Network with New Public-Private Partnerships
(Dec. 23, 2024).
8
Funding Circle Full Year Results, Audio Webcast Transcript (Mar. 7, 2024). https://fch-12917-s3.s3.eu-west-
2.amazonaws.com/live/4717/0982/2261/Funding_Circle_-_Transcript_20240307.pdf
The Honorable Kelly L. Loeffler
February 20, 2025
Page 3 of 5

COVID-19 Pandemic.9 Unfortunately, the Biden-Harris SBA delayed and stonewalled nearly all
of the Committee’s requests for information.10 It is estimated that across the SBA’s COVID-19
Lending programs, approximately $200 billion went to potentially fraudulent recipients.11 As the
Department of Government Efficiency (DOGE) bolsters the Trump Administration’s efforts to
root out waste and fraud, the Committee looks forward to working with you and DOGE to hold
fraudsters accountable. That is why one of my first actions this Congress was to introduce H.R.
825, the Assisting Small Businesses Not Fraudsters Act, which would permanently BAN
FRAUDSTERS from SBA assistance.

Further, in 2022 the SBA unilaterally decided to suspend collection activities on
delinquent COVID-19 Economic Injury Disaster Loans and Paycheck Protection Program valued
at $100,000 or less.12 The Committee repeatedly informed the SBA that this decision would
undermine the ability of the SBA to reclaim pandemic funds and pursue fraud within these
programs.13 Despite consistent pressure from the Committee and other stakeholders, it took the
Biden-Harris SBA over 18 months to reverse this decision.14 The Committee is interested in
determining the Biden-Harris SBA’s rationale for this decision and seeks to understand the
impact this had on the ability of law enforcement to track and prosecute fraud.

Misguided Contracting Goals

Finally, the Biden-Harris Administration advanced contracting goals that unfairly favored
some businesses over others and contradicted the goals created by Congress.15 Fortunately, this
policy was revoked by President Trump on his first day in office.16 The Committee appreciates
the opportunity to work with you to ensure that the SBA’s goals fit with Congress’s intent, and
create a strong, merit-based system of competition in Federal small business contracting.

The Committee looks forward to working with you to resolve these issues and build a
more efficient SBA. Increasing the efficiency of the SBA will help ensure that small businesses,
which make up 99.9 percent of all businesses in the United States, are brought into the golden
age of America.

9
U.S. H. COMM. ON SMALL BUS., A MISCALCULATED RISK: FRAUD WITHIN THE SBA’S COVID LENDING
PROGRAMS (Nov. 2024) (Staff Report).
10
Subpoena from H. Comm. On Small Bus., to Isabella C. Guzman, Adm’r, U.S. Small Bus. Admin. (Jun. 5, 2024).
11
U.S. H. COMM. ON SMALL BUS., A MISCALCULATED RISK: FRAUD WITHIN THE SBA’S COVID LENDING
PROGRAMS (Nov. 2024) (Staff Report).
12
Memorandum, from Jihoon Kim, Director, Office of Fin. Program Operations, U.S. Small Bus. Admin., to
Isabella Casillas Guzman, Adm’r, U.S. Small Bus. Admin. (Apr. 5, 2022) (on file with Committee).
13
U.S. H. COMM. ON SMALL BUS., BUREAUCRATIC MISMANAGEMENT: INSIDE THE SBA’S DECISIONS TO END
COLLECTIONS ON NEARLY A QUARTER OF ITS COVID-19 LENDING PORTFOLIO (Oct. 2024) (Staff Report).
14
Letter from Isabella Guzman, Adm’r, U.S. Small Bus. Admin., to Roger Williams, Chairman, H. Comm. on Small
Bus. (Dec. 28, 2023).
15
Press Release, The White House, Fact Sheet: Biden-Harris Administration Announces Reforms to Increase Equity
and Level the Playing Field For Underserved Small Business Owners, (Dec. 2, 2021); 15 U.S.C. § 644.
16
Exec. Order No. 14148, 90 Fed. Reg. 8237 (Jan. 20, 2025).
The Honorable Kelly L. Loeffler
February 20, 2025
Page 4 of 5

In God We Trust,

________________________ _________________________
Roger Williams Pete Stauber
Chairman Member
Committee on Small Business Committee on Small Business

_________________________ _________________________
Dan Meuser Beth Van Duyne
Member Member
Committee on Small Business Committee on Small Business

_________________________ _________________________
Jake Ellzey Mark Alford
Member Member
Committee on Small Business Committee on Small Business

_________________________ _________________________
Nick LaLota Brad Finstad
Member Member
Committee on Small Business Committee on Small Business
The Honorable Kelly L. Loeffler
February 20, 2025
Page 5 of 5

______ ___________________ _________________________
Tony Wied Rob Bresnahan
Member Member
Committee on Small Business Committee on Small Business

_________________________ _________________________
Brian Jack Troy Downing
Member Member
Committee on Small Business Committee on Small Business

_________________________ ___ ______________________
Kimberlyn King-Hinds Derek Schmidt
Member Member
Committee on Small Business Committee on Small Business

cc: The Honorable Nydia M. Velázquez, Ranking Member
Committee on Small Business

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