The U.S. House of Representatives has passed the Capping Excessive Awarding of SBLC Entrants (CEASE) Act, a bill introduced by Representative Rob Bresnahan, Jr. from Pennsylvania’s 8th district. The legislation aims to enhance oversight capabilities for small business lending companies (SBLCs), which are primarily regulated by the Small Business Administration (SBA). The bill was approved with a bipartisan vote of 214-198.
“Small businesses deserve a reliable program that works for them, and that means keeping our community banks at the core of the system,” said Rep. Bresnahan. “President Trump and I agree, we shouldn’t be incentivizing fraud and abuse by flooding the program with risky, underregulated institutions.”
The CEASE Act proposes to cap the number of non-bank SBLC licenses at 16, maintaining current levels. This move is intended to prevent taxpayer-backed guarantees from being issued to lenders that may not be adequately overseen by the SBA.
The SBA authorizes government-backed 7(a) loans through both certified depository institutions such as banks and credit unions, and certified non-bank lenders like fintech companies. Unlike depository institutions whose primary regulator is the Federal Reserve, non-bank SBLCs fall under SBA regulation alone.
Non-depository institutions saw an increase in fraud rates during COVID-related Paycheck Protection Program lending. During this period, the Biden Administration increased the number of SBLCs for the first time in nearly three decades.
“My legislation caps the number of non-bank SBLC licenses, ensuring taxpayer-backed guarantees are not handed out to lenders the SBA cannot properly oversee,” Rep. Bresnahan stated. “I am proud to see my legislation passed today, and I look forward to President Trump signing it into law.”
The CEASE Act has received endorsements from several organizations including American Bankers Association, Independent Community Bankers of America, and America’s Credit Unions.
