Sponsors (2)
Creates an SBA direct microbusiness loan program offering loans up to $100,000 to for‑profit microbusinesses (≤10 FTE) and lowers the interest‑rate floor to 1%.
Official title: Amend the Small Business Act to establish a direct loan program for microbusinesses at the Small Business Administration, and for other purposes.
Introduced May 14, 2026 by Catherine Marie Cortez Masto · Last progress May 14, 2026
The bill increases small microbusiness access to low-cost SBA credit and streamlines outreach, but raises risks of added borrower fees, third‑party incentives that could harm borrowers, and greater taxpayer exposure if program safeguards and revenue are weakened.
Microbusiness owners (≤10 employees) gain access to SBA direct loans up to $100,000, increasing capital availability for startups and very small firms.
Eligible microbusiness borrowers would face a much lower statutory interest-rate floor (1% vs. 6%), reducing borrowing costs and monthly debt service.
Small-business owners, especially in underserved areas, may get faster outreach and loan delivery because the SBA can pay third-party referral/origination agents and partner with intermediaries.
Microbusiness borrowers may face new fees (origination, servicing, draw/unused fees) that raise the effective cost of credit and partially offset lower interest rates.
Allowing payments to third‑party partners and agents could shift costs onto borrowers and create incentives for aggressive or predatory referral practices.
Lowering the interest-rate floor to 1% may reduce SBA program revenue and increase taxpayer exposure if defaults rise, harming program solvency.
Based on analysis of 2 sections of legislative text.
Creates a new SBA direct lending program that provides loans up to $100,000 to qualifying for‑profit microbusinesses (defined as businesses with no more than 10 full‑time employees and revenue caps defined in statute). The SBA Administrator can originate and disburse loans directly or through third‑party partners, charge borrower fees to cover program costs, and must issue interim final rules and update regulations within 90 days. The bill also sets the loan interest rate framework under the existing 7(a) statute but lowers the statutory interest floor from 6% to 1% per annum.