Ernst asks SBA to probe lenders recently barred by USDA Published June 11, 2026

Written by John Reosti

• Key insight: The spotlight on lenders’ credit quality may signal a broader concern about the health of government-guaranteed loan portfolios.
• What’s at Stake: Sen. Joni Ernst’s letter suggests that the Small Business Administration could begin sanctioning lenders, similar to recent actions by the U.S. Department of Agriculture.
• Expert quote: “SBA must determine whether taxpayers were exposed to unnecessary risk and ensure bad actors are not exploiting federally guaranteed loan programs.” — Sen. Joni Ernst, R-Iowa

The chair of the U.S. Senate committee that oversees the Small Business Administration is urging the agency to examine the performance of 10 lenders the Department of Agriculture recently ejected from its flagship loan-guarantee program.

In a letter Thursday, Iowa Republican Sen. Joni Ernst, who chairs the Small Business and Entrepreneurship Committee, called on SBA Administrator Kelly Loeffler to “urgently review” loans originated by the institutions whose approved-lender status was permanently revoked by the USDA last month.

Ernst asked Loeffler to “consider similar corrective action to prevent irresponsible lenders from taking advantage of SBA’s 7(a) loan program.”

Both the SBA’s 7(a) program and the USDA’s OneRD program guarantee loans made by private-sector lenders to businesses. The 7(a) program is considerably larger, however. The SBA reported $123.4 billion in active regular 7(a) loans as of Sept. 30, 2025. Meanwhile, OneRD’s total portfolio recently topped $12 billion. 

Eight of the 10 lenders that USDA expelled are active 7(a) participants, Ernst wrote. 

Many people in the government-guaranteed lending sector were stunned when the USDA announced the lender revocations on May 12.

The USDA’s action and now Ernst’s letter signal “a broader shift toward accountability, portfolio quality across all government-backed lending,” said Dave Bohrman, co-founder and vice president of marketing at Tax Guard, a servicer of both SBA and USDA loans.

“There’s been signals in this direction for a while now,” Bohrman told American Banker. He pointed to controversy over fraudulent Paycheck Protection Program loans and Loeffler’s reversal last year of the Biden-era SBA’s more accommodating “Do-What-You-Do” underwriting standards.

During Loeffler’s tenure as administrator, the SBA has raised fees and tightened 7(a) lending rules after experiencing a spike in defaults and delinquencies.

A USDA spokesperson said the 10 revocations were “an unprecedented action” taken after the department identified “significant findings of noncompliance with the regulatory requirements of the OneRD program.”  

Source: Ernst asks SBA to probe lenders recently barred by USDA