Nodler: Small Businesses Continue to Suffer from Over-Regulation

This session, I drafted a resolution approved by the Legislature and sent to Washington, D.C. urging the federal government to reverse their course in implementing federal regulations that severely limit banks’ ability to lend. Senate Concurrent Resolution 33 made it clear that Missouri supports small businesses in this state, and that we want lending practices to change.

Community banks throughout Missouri are facing a situation where their hands are tied because they face tighter regulations from the Comptroller of the Currency, Federal Reserve, and Missouri Division of Finance. This overly restrictive credit environment actually provides banks with an incentive not to issue loans. I sponsored SCR 33 to encourage the federal government to instead give community banks the right tools to start lending again.

The federal government, however, refuses to listen to the outcry from small business owners, community banks, and even state legislatures. Now, the private sector has taken the matter into its own hands. Sam’s Club, for example, is testing a program with Superior Financial Group. The program will offer small business loans ranging from $5,000 to $25,000 to qualifying Sam’s Club business members. To qualify, applicants will need to meet basic credit criteria and be a member of Sam’s Club. The loan program is regulated by the Small Business Administration.

According to a survey conducted by the National Federation of Independent Business, only half of small businesses that tried to borrow last year got all or most of what they needed. In the mid-2000s, 90 percent of businesses said they got the loans they needed. This is a problem that affects, not just small business owners, but our entire economy. I continue to urge the federal government to relax regulations and give our community banks the ability to do what they do best. However, with the federal government refusing to act, I am pleased to see that some organizations are stepping up and filling the gap and working to stimulate economic recovery.