The chairman of the House Small Business Committee, Sam Graves, R-Mo., has introduced legislation to streamline and simplify the loan application process at the Small Business Administration by requiring the agency to permit the use of electronic signatures and electronic records.
The Small Business Loan Simplification Act of 2014 aims to modernize the technology in use at the SBA and catch up with the kind of technology already being used by private lenders and other federal agencies. Rep. Steve Chabot, R-Ohio, David Schweikert, R-Ariz., Richard Hanna, R-N.Y., Tim Huelskamp, R-Kan., and Chris Collins R-N.Y., have signed on as original co-sponsors of the legislation.
The Small Business Loan Simplification Act of 2014 would permit participants in SBA financing programs, including borrowers and lenders, to use electronic signatures and records in the certification and transmission of documents. The bill would also require the SBA to accept electronic signatures and records associated with the management of its financing programs.
“Access to capital continues to be a major issue for many small businesses and people trying to start new companies,” Graves said in a statement. “A lengthy and complicated loan application process is often a great impediment for many small businesses to secure the capital they need to get their products or services to market. The majority of the time spent during the SBA loan application process consists of lenders collecting required documentation and having to seek out the ink signatures of borrowers. The Small Business Loan Simplification Act of 2014 will employ widely used and proven e-signature and records technology to reform the SBA loan process. This will likely cut the application process by an average of two to three days.”
The Electronic Signatures in Global and National Commerce Act of 2000 made valid the use of e-signatures on binding documents, but the SBA has not yet permitted their use during the application process for its array of financing programs, according to Graves’ office.
General bank lending to small businesses still has not returned to pre-recession levels. According to the Federal Deposit Insurance Corporation, at the end of the first quarter, banks held $585 billion in loans to small businesses, which is 18 percent lower than in 2008. And the number of loans for $1 million or less held by banks is down about 14 percent from 2008.
The bill has attracted support from industry, including providers of electronic signature and record technology, the banking community, and a number of organizations representing various types of SBA lenders.
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