Rules would let religious firms get SBA loans
Biden appointee will have final word on proposal
The U.S. Small Business Administration has proposed new rules that would permanently allow religious businesses to receive taxpayer-backed small business loans, forcing the Biden administration into a politically sensitive debate that raises questions about separation of church and state.
The proposed regulation, made public Tuesday afternoon on President Donald Trump’s last full day in office, would do away with restrictions preventing taxpayer-backed loans from going to “businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting.”
If the rule were finalized, it would open up seven SBA loan programs to a range of religious-affiliated businesses such as Christian publishers and for-profit schools affiliated with religious organizations. It’s unclear whether the rules would also apply to tax-exempt places of worship, such as churches, or nonprofit health-care organizations such as Catholic hospitals.
Outgoing SBA Administrator Jovita Carranza characterized the regulation as an effort to give religious businesses the same rights as other businesses.
“America’s faith-based small businesses and organizations play a vital role in providing employment opportunities, products, and essential educational, training and youth social services that benefit both our local communities and the overall national economy,” Carranza said.
The proposed rule “would ensure that these businesses and organizations are not forced to choose between their faith and the SBA financial assistance that they need to continue serving the public and employing our neighbors,” she said.
The proposed rule still needs to undergo a lengthy approval process, starting with a public comment period ending Feb. 18. Even when that process concludes, it will fall to an SBA headed by Biden-appointed Administrator Isabel Guzman, a former small business owner who was SBA chief of staff in the Obama administration, to decide whether and how to move forward.