Independent Banker - March 2018 - 34

Grassroots
SBA LENDING REFORM
Safeguarding small business
A bipartisan, bicameral plan preserves the SBA program.
By John Hand and Stephen Keen
T
he trend of pro-community
bank legislation with
strong bipartisan support
continued with the
recent introduction of
legislation to reform and strengthen
the Small Business Administration's
(SBA) 7(a) lending program. Bipartisan
legislation introduced in both
chambers of Congress is designed
to safeguard and strengthen the
program so responsible lenders like
community banks can continue to use
it to fund local small businesses.
Testifying before the House Small
Business Committee, ICBA community
banker Cynthia Blankenship
(pictured, right) expressed ICBA's
support for the Small Business 7(a)
Lending Oversight Reform Act
(H.R. 4743 and S. 2283). " The Small
Business Administration's 7(a) loan
program allows community banks to
leverage their unique underwriting
skills to more effectively serve the
ICBA believes reforms
to the 7(a) program
will help maintain its
integrity and ensure
its longevity.
small businesses in their communities, "
said Blankenship, chairman and
corporate president of Bank of the
West in Grapevine, Texas. " A robust
and sustainable 7(a) program with
broad community bank participation
S-corp shareholders eligible for
new deduction
By John Hand and Alan Keller
The Tax Cuts and Jobs Act of 2017 generally provides that shareholders of
Subchapter S corporations and other pass-through businesses are eligible
for a deduction equal to 20 percent of their qualifi ed business income,
subject to certain limitations. The tax reform law also provides that shareholders
in a " specifi ed service trade or business " are not eligible for this
deduction, unless they are below a certain income threshold.
" Specifi ed service trade or business " is defi ned with reference to an
existing list of professional fi elds in the Internal Revenue Code (section
1202(e)(3)(A)). This list includes " fi nancial services " but not " banking, "
which is listed elsewhere. Read in its entirety, section 1202 clearly distinguishes
the two terms.
ICBA was in ongoing contact with lawmakers and staff during the
crafting of the law and was repeatedly assured that shareholders in S-corp
community banks would be eligible for the pass-through deduction.
John Hand (john.hand@icba.org) is ICBA fi rst vice president of congressional
relations. Alan Keller (alan.keller@icba.org) is ICBA fi rst vice president of
legislative policy.
32 ICBA Independent Banker March 2018
will help small
businesses
thrive and create
jobs, strengthening
and extending the
economic recovery. "
ICBA believes reforms to the
Cynthia Blankenship
7(a) program will help maintain its
integrity and ensure its longevity. The
legislation includes targeted reforms
to clarify and codify into law key
parts of the 7(a) program. Among the
changes, the bill would:
» strengthen the integrity of all SBA
guaranteed lending programs by codifying
the SBA Offi ce of Credit Risk
Management and Lender Oversight
Committee, increasing transparency
in the offi ce's budget and providing
guidelines for lender reviews and
lender appeals rights
» safeguard the 7(a) program from
abuse by codifying the SBA's " Credit
Elsewhere Test, " which requires lenders
to fully substantiate and document
the reasons a given applicant cannot
be served with conventional credit
» stabilize 7(a) program funding
by allowing the SBA to lift the cap
on general business loans by up to
15 percent of the limit if the cap is
reached, as it was in 2015, which
disrupted SBA lending and required
emergency legislation.
ICBA will continue working with
the House Small Business Committee
and other policymakers to help shape
and perfect the 7(a) bill as it makes its
way through the legislative process.
John Hand (john.hand@icba.org) is ICBA
fi rst vice president of congressional
relations. Stephen Keen (steve.keen@
icba.org) is ICBA vice president of
congressional relations.
Independent Banker - March 2018

Table of Contents for the Digital Edition of Independent Banker - March 2018
