"Chairman Williams, Senator Ernst Issue Statement on Funding Circle"
Summary
A joint statement dated June 25, 2024 from Congressman Roger Williams (TX-25), Chairman of the House Committee on Small Business, and Senator Joni Ernst (R-IA), Ranking Member of the Senate Committee on Small Business and Entrepreneurship. The statement responds to Funding Circle voluntarily withdrawing its Small Business Lending Company (SBLC) license and says the company never should have received one from the SBA. The two members say they will continue to monitor any participation by Funding Circle in SBA lending and the 7(a)-loan program. A background section states that the SBA had announced it would lift a 40-year moratorium on licensing new SBLCs and intended to license three new SBLC lenders.
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Full text
Chairman Williams, Senator Ernst Issue Statement on Funding Circle June 25, 2024 WASHINGTON, D.C. – Today, Congressman Roger Williams (TX-25), Chairman of the House Committee on Small Business, along with Senator Joni Ernst (R-IA), Ranking Member of the Senate Committee on Small Business and Entrepreneurship, issued the following joint statement on Funding Circle voluntarily withdrawing their Small Business Lending Company (SBLC) license. “As we have been saying from the moment it was announced, Funding Circle never should have received an SBLC license from the SBA. We are pleased to see this license returned to the SBA but remain concerned on how a company with such a weak financial position was granted a license in the first place. We will continue to monitor any participation from Funding Circle in SBA lending and the 7(a)-loan program due to this administration's risky underwriting changes that could put taxpayers on the hook for unprecedented losses.” Background: Last year, the SBA announced it would be lifting a 40-year moratorium on licensing new SBLCs to participate in the 7(a)-loan program, stating its intent to immediately license three new SBLC lenders. Members in both the House and Senate expressed concerns over this expansion, citing doubts about the SBA’s capacity to serve as the primary regulator for additional SBLCs. A few months ago, it was indicated that Funding Circle, one of the non-depository financial institutions selected to receive an SBLC license, had been granted final approval of the license. The license was granted despite public statements by its CEO that it did not plan to invest the intensive capital required to participate in the 7(a)-loan program, and instead announced its U.S.-based operations would be sold to mitigate losses. These statements from Funding Circle pointed to a fundamental failure in the SBA’s vetting of applicants for the SBLC licenses, and further reinforce the bipartisan concerns raised by members last year about the SBA’s lack of oversight capacity. While the Committees are thankful that Funding Circle turned over their license, this should undoubtedly never have happened in the first place.
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