SBA’s Awarding of Small Business Lending Company Licenses

The Office of Inspector General (OIG) is issuing this evaluation report to assess the Small Business Administration’s process for awarding Small Business Lending Company (SBLC) licenses and its compliance with licensing procedures.

An SBLC is a non-depository lending institution that is licensed and authorized by SBA to make loans pursuant to Section 7(a) of the Small Business Act and to intermediaries in SBA's Microloan Program.  In 1981, SBA imposed a moratorium on licensing new SBLCs and lifted the moratorium in 2023, opening the application period for three new SBLC licenses.  The three new SBLC licenses were issued to lenders focused on underserved markets, including small businesses in native, rural, and low-income communities.

SBA complied with its licensing procedures when it awarded three new SBLC licenses in fiscal year 2024. These procedures included an evaluation of qualitative factors required in the SBLC application and a comprehensive assessment of other factors that gauged each applicant’s strengths and limitations, such as historical performance measures and the applicant’s affiliation with lenders or lender service providers previously sanctioned by SBA. The application evaluation process also included reviews by different personnel across multiple SBA offices. In addition, we reviewed applications for the three awarded licenses and determined they contained all the information SBA required. As a result, we made no recommendations.