Ernst Calls on SBA to Review Lenders Removed from USDA Loan Program

Ernst Calls on SBA to Review Lenders Removed from USDA Loan Program

Senate Small Business Committee Chair urges SBA to protect taxpayers and hold bad actors accountable

WASHINGTON - U.S. Senator Joni Ernst (R-Iowa), Chair of the Senate Committee on Small Business and Entrepreneurship, is calling on the U.S. Small Business Administration (SBA) to review lenders recently removed from the U.S. Department of Agriculture's (USDA) flagship loan guarantee program and determine whether additional corrective action is necessary to protect taxpayers.

In a letter to SBA Administrator Kelly Loeffler, Ernst highlighted the recent failure of Community Bank & Trust - West Georgia, a lender that participated in both USDA and SBA lending programs. This lender partnered with nonbank affiliates, to launch an aggressive expansion of a nationwide SBA and USDA-guaranteed lending operation and came under regulatory scrutiny by the Federal Reserve.

"When a small community bank becomes a top SBA lender one year and fails the next, something went seriously wrong," Ernst said. "SBA must determine whether taxpayers were exposed to unnecessary risk and ensure bad actors are not exploiting federally guaranteed loan programs."

Ernst urged the agency to review loans originated by the institutions whose approved-lender status was permanently revoked by USDA due to findings of noncompliance with program requirements.

"Taxpayers deserve confidence that federally guaranteed loan programs are being administered responsibly and with proper oversight," Ernst said. "When a lender is removed from one federal lending program for serious compliance concerns, it is only prudent to determine whether similar risks exist elsewhere."

Eight of the ten lenders recently removed from USDA's OneRD loan guarantee program currently participate in SBA's 7(a) loan program, which supports small businesses across the country through federally guaranteed loans issued by private-sector lenders.

As Chair of the Senate Committee on Small Business and Entrepreneurship, Ernst has prioritized rooting out waste, fraud, and abuse in federal programs while ensuring taxpayer dollars are protected. Her request follows recent SBA efforts to strengthen underwriting standards and improve oversight of federally guaranteed lending programs.

Ernst's letter asks the SBA to review the affected lenders' participation in the 7(a) program and consider whether additional actions are warranted to safeguard taxpayer funds and ensure the integrity of federal lending programs.

A copy of the letter can be found HERE.

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