SBA faces backlash over Funding Circle licensing debacle

In a recent government meeting, significant concerns were raised regarding the Small Business Administration's (SBA) handling of the SBLC (Small Business Lending Company) licensing process, particularly in relation to Funding Circle. On March 7, the CEO of Funding Circle announced that the company would not retain the SBLC license and expressed disinterest in participating in 7(a) lending. This statement was later contradicted during a committee testimony on March 20, where it was claimed that Funding Circle would begin lending soon.

Senate Small Business Chairwoman Jeanne Shaheen expressed her concerns in a letter dated April 1, questioning the SBA's consideration of the SBLC license approval in light of the CEO's statements. Despite these warnings and the company's own assertions, the SBA finalized the license on the same day. Subsequently, Funding Circle sold its U.S. operations in the summer and surrendered the SBLC license back to the SBA in June, having never issued a single loan.

Critics, including administrative officials, highlighted that instead of awarding the license to a company prepared to lend, the SBA allowed Funding Circle to hold the license for eight months without assisting any borrowers. This situation has raised serious questions about the SBA's management of the licensing process, with implications for future applications as the SBA announced it would accept new applications for SBLC licenses starting September 2. The meeting underscored the need for greater scrutiny and accountability in the SBA's decision-making processes regarding small business lending.