Microbusiness Support Act
- Sponsor
- Sen. Cortez Masto, Catherine [D-NV]
- Committees
- Small Business and Entrepreneurship Committee (primary)
- Last action
- May 14, 2026
Bottom line
The bill establishes a new direct federal loan program through the SBA to provide capital specifically to the smallest businesses, aiming to fill a gap in access to traditional financing.
What it actually does
This bill amends the Small Business Act to create a new direct loan program specifically for microbusinesses within the Small Business Administration (SBA). It defines a microbusiness as an entity with up to 10 full-time employees and annual revenue not exceeding $5,000,000 or its NAICS size standard. The program authorizes direct loans up to $100,000, allows the SBA to charge fees to cover administrative costs, and sets a specific interest rate structure.
Proponents argue
Supporters argue that microbusinesses, despite being vital job creators, often struggle to access capital from traditional lenders due to their small size and loan amounts. This direct loan program would provide a crucial lifeline, fostering entrepreneurship and economic growth in underserved communities. The ability to partner with third parties would also expand the program's reach and efficiency.
Opponents contend
Critics might express concerns about the administrative burden and potential credit risk placed directly on the SBA by a direct lending program, as opposed to its traditional loan guarantee model. They may also argue that the fees allowed could still make loans less attractive to struggling microbusinesses, or that the $100,000 cap might be too restrictive for some growing microbusinesses.
The bill is short and clearly written, making it accessible for a quick read and easy to understand its core provisions.
Section 2, (38)(A)
Definition of Microbusiness
This provision defines a 'microbusiness' for the purposes of this new loan program. To qualify, a business must be independently owned and for-profit, employ no more than 10 full-time equivalent employees, and have annual revenue not exceeding $5,000,000 or its industry-specific size standard. The SBA Administrator is authorized to verify a business's qualification.
Supporters argue
Proponents argue that this precise definition ensures the program's resources are exclusively directed towards the smallest businesses, which often face the greatest barriers to accessing capital, preventing larger small businesses from dominating the program.
Critics contend
Some might contend that the definition is too narrow, potentially excluding slightly larger small businesses (e.g., 11-15 employees) that still struggle to secure traditional financing and could also benefit from targeted support.
Tradeoffs
The tension lies in balancing strict targeting to the smallest entities with potentially excluding other small businesses that also face financing challenges.
Section 2, (38)(B)
Direct Loan Authority
This section grants the Small Business Administration (SBA) Administrator the authority to directly originate and disburse loans to qualifying microbusinesses. It also explicitly allows the SBA to utilize partnerships with third parties to facilitate these direct loans.
Section 2, (38)(C)
Maximum Loan Amount
This provision sets a clear limit on the size of loans available through this new microbusiness program. The maximum amount a microbusiness can borrow under this program is $100,000.
Section 2, (38)(D)
Program Fees and Third-Party Compensation
This section authorizes the SBA, its authorized third parties, or agents to charge various fees to borrowers. These fees are intended to cover costs associated with all aspects of the loan process, including application referral, origination, underwriting, servicing, and liquidation. It also explicitly allows for fees on revolving lines of credit and permits the SBA to pay third parties for their assistance in administering the loan program.
This provision specifies that the interest rate for loans made under this microbusiness program will follow the general framework of paragraph (4)(A) of the Small Business Act, but with a critical modification: '6 percent per annum' will be substituted for '1 percent per annum' in that existing formula.
Section 2, (38)(E)(ii)
Why it matters:This is standard legislative practice to modify existing statutory frameworks rather than rewriting entire sections, promoting consistency and brevity in bill drafting.
Case for: Supporters argue that this method ensures the interest rate is consistent with established SBA practices while allowing for a slightly higher, yet still affordable, rate that helps cover the program's operational costs and mitigate risk, making the program more sustainable.
Case against: Critics might argue that the technical cross-reference makes it difficult for a casual reader or even a potential borrower to immediately grasp the full implications of the interest rate structure without consulting external legal texts, potentially obscuring the true cost of borrowing.
Estimated impact: Directly impacts the cost of borrowing for every microbusiness that receives a loan under this program, influencing their repayment burden and overall financial viability.