Last night, Donald Trump nominated Senator Kelly Loeffler to be the new administrator for the Small Business Administration. She will have to make tough decisions and navigate some tricky questions in Congress. Let me explain.
The Covid-19 Economic Injury Disaster Loan portfolio is an ongoing headache for the SBA and is putting a cloud over the agency. Last week, Debanked, a media company that calls itself a guide to nonbank finance, reported that cumulative EIDL charge-offs of this portfolio now exceed $70 billion. And with an outstanding principal balance of more than $277 billion, there is still plenty of blood likely to be spilled. The incoming SBA head will have plenty of tough policy calls to make with this portfolio, calls that will have to balance the government’s responsibility to protect taxpayers with its responsibility to support the long-term success of borrowers.
I hope the new SBA administrator will not allow this black cloud to damage the long-term vision of the SBA or its disaster-loan program. It's worth pausing to remember the fundamental goals of the EIDL program.
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