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PRESS | Collapse of Silicon Valley Bank Raise Major Concerns for Small Business


March 13, 2023


Contact:

Molly Day

202-552-2904


Washington, D.C. – The National Small Business Association (NSBA) has heard from several small-business members whose funds were tangled up in the collapse of Silicon Valley Bank (SVB), prompting questions among all small businesses about the safety of their money. Although technically a regional bank, SVB was among the top 20 largest commercial banks and is a major player among high-growth and tech start-ups.


Below is a statement from NSBA President and CEO Todd McCracken on the elections.


“The announcement from the FDIC that they will guarantee the funds in SVB beyond the $250,000 typically insured is a life raft for many small businesses. However, it raises broader concerns about the meaning of “federally insured deposits” and highlights questions about whether small business and individuals should be treated virtually the same, despite their vast differences in cash-flow needs.


“Unfortunately, the major losses that could have been incurred by the smaller firms at SVB—or other, similar financial institutions—could be catastrophic with significant ripple effects. Beyond massive cash losses that could have happened, small businesses in these situations could fail to meet payment deadlines, payroll, or other obligations that could cause significant harm to the broader community.”


“While NSBA welcomes a thoughtful evaluation of the rules that govern the ‘safety and soundness’ of our banking system, we are mindful that a knee-jerk reaction that overregulates the system could render banks like SVB ineffective. Despite this major failure, banks like SVB fill an important niche and provide unique financing options for smaller firms that simply are unavailable at larger banks.


“Access to capital is a major issue for small businesses—in fact, today more than one-third of small businesses say they are unable to obtain adequate financing—the highest this indicator has been since 2008. NSBA has, for years, been urging critical reforms to small-business lending and the SVB collapse is a clear indication that reforms are needed now.”


Celebrating more than 85 years in operation, NSBA is staunchly nonpartisan and uniquely member-driven. We advocate on behalf of America’s small-business owners and entrepreneurs. NSBA's 65,000 members represent every state and every industry in the U.S., and we are proud to be the nation’s first small-business advocacy organization. Please visit www.nsba.biz.


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