Basel III Endgame will increase the cost and reduce the availability of credit for small businesses, making it harder and more expensive for these crucial engines of the U.S. economy to get a loan. Without reliable access to credit, small business owners may struggle to hire and pay employees, buy inventory, or run their businesses successfully. 

Here's what small business owners and advocates are saying about the proposed rule:

• Jill Bommarito, founder and CEO of Ethel's Baking Co., cautioned that Basel III Endgame could have drastic effects on small businesses such as hers: "If enacted, this rule would not only cut off many small businesses from accessing the capital they need to grow, but it will push small-business owners to predatory lenders because they'll have no other choice. Alarmingly, the same survey of small-business owners shows small-business owners turning to predatory lending amid the capital crunch is already beginning. I come from a family of entrepreneurs and have seen firsthand the consequences of predatory lenders. It's simply unconscionable." (Founder and CEO of Ethel's Baking Co. Jill Bommarito, "The Basel III rule would hamstring small businesses like mine," 1/15/2024)
• The U.S. Chamber of Commerce Coalition said loans would become more expensive for small businesses: "Businesses will be confronted with either higher costs or fewer options in nearly every product and service they access from affected banks. For example, small business loans will be more expensive given the proposed rule requires banks to hold more capital against credit exposures from companies that are not publicly listed." (U.S. Chamber of Commerce, Letter, 11/14/2023)
• Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, argued the needs of small businesses would be neglected if the proposal is finalized without changes: "The small businesses that drive the U.S. economy and local economies throughout our nation are being hung out to dry as regulators ignore the underlying causes of recent bank failures. Lawmakers cannot stand by and allow these harmful policies to get rammed through to completion. The costs and pain will burden millions of Americans, whereas only the few banks and executives who failed their depositors and investors should be paying the price." (Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, as quoted in "Fed policies continue to batter small businesses," American Banker, 11/6/2023)
• The National Housing Conference warned that the proposal would likely decrease Community Reinvestment Act-driven lending, which will primarily affect low- to middle-income businesses and underserved groups: "Outside of mortgage markets alone, the rule would likely impact lending in the rural space where CRA-driven investment could be reduced. Raising capital standards discourages lending and reduces credit availability through downstream impacts, which will likely be felt first and foremost by lower-income businesses and underserved groups who are often overrepresented as borrowers with riskier loans. This means that an LMI small business owner who previously could have been funded through CRA-driven investment may not see that investment because community development initiatives under CRA will be stressed or negated. Given how recently the CRA regulation was updated and the impending two-year implementation period that will shift the lending dynamics of banks, it is particularly risky to make additional changes while a new market equilibrium is being tested." (National Housing Conference, Letter, 1/12/2024)

The growing number of voices expressing concern about the impact of the proposal on small businesses underscores why it's time to scrap Basel III Endgame and start over.