In an effort to simplify and improve the process of applying for a loan with the Small Business Administration (SBA), Rep. Sam Graves (R-Mo.) has introduced a bill that would allow electronic signatures on loan applications.
The Small Business Loan Simplification Act aims to bring the SBA’s technology usage up to the same standards used by other agencies and private lenders, with electronic records and a simplified loan application process.
Graves, the chairman of the House Small Business Committee, explained that complicated loan processes can be a serious issue for small business that need funds to get their companies off the ground.
“The majority of the time spent during the SBA loan application process consists of lenders collecting required documentation and having to seek out the ink signatures of borrowers,” Graves said.
He believes that improving the use of technology can potentially “cut the application process by an average of two to three days” by allowing both the lender and the borrower to sign documents electronically.
Though electronic signatures were made legal by the Electronic Signatures and National Commerce Act of 2000, the SBA has not yet allowed electronic signatures for any of its loan programs.
Reps. Chris Collins (R-N.Y.), Richard Hanna (R-N.Y.), Tim Huelskamp (R-Kan.), David Schweikert (R-Ariz.), and Steve Chabot (R-Ohio) originally co-sponsored the Small Business Loan Simplification Act.
Since banks have not yet returned small business lending to levels from before the recession, improving the loan process may help more small businesses get the capital they need.
Holding $585 billion in small business loans, banks were still holding 18% less for small businesses than they were in 2008, according to the Federal Deposit Insurance Corporation. Loan numbers for $1 million or less dropped about 14% from 2008.
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