The Small Business Administration's move to bar businesses with any non-U.S. owners from loan guarantees has created a headache for lenders and borrowers alike.
The lender must go through each layer of ownership to determine who the actual owners of the business are. The more complex the ownership structure of the business, the more time and effort the lender will need to ensure compliance with SBA rules.
The SBA mandates that lenders provide a complete list of all direct and indirect owners of the business.
The new rules will inevitably lengthen processing time. The delay itself introduces a new risk that lenders will need to contend with.
As SBA rules become more restrictive, private capital can help fill the small-business credit gap.