The U.S. Small Business Administration has approved an initial group of six community-based, mission-focused lenders to start accepting and processing Community Advantage loan applications from small business borrowers immediately, the agency announced today.
The new Community Advantage pilot program was announced by SBA in December and is designed to expand access to lower dollar loans and lending in traditionally underserved communities. SBA and U.S. Department of Commerce studies have shown the importance of lower dollar loans to small business formation and growth in underserved communities. Even though SBA loans are three-to-five times more likely to go to women and minority-owned small businesses, underserved communities were hit disproportionately hard by the recession.
The pilot is specifically aimed at expanding points of access to capital for small business owners by opening SBA’s 7(a) loan program to community-based, mission-focused financial institutions, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. Community Advantage leverages the experience these institutions already have in lending in economically challenged markets, along with their management and technical assistance expertise to help make their borrowers successful.
“Working with these community-based, mission-focused lenders will greatly enhance our ability to bring much needed financial backing to small businesses in underserved communities, which include minority-, women- and veteran-owned, as well as rural businesses,” SBA Administrator Karen Mills said. “These businesses are among the hardest hit by the recent economic downturn and helping them to recover, expand and create jobs will strengthen both their local and our nation’s economy.”
SBA began accepting applications from lenders on Feb. 15. The first Community Advantage lenders approved by SBA are:
Cen-Tex CDC dba BCL of Texas, Austin, Texas
The Progress Fund, Greensburg, Pa.
Eastern Maine Development Corporation, Bangor, Maine
Idaho-Nevada Community Development Financial Institution, Pocatello, Idaho
Kentucky Highlands Investment Corporation, London, Ky.
CDC Small Business Finance, San Diego, Calif.
These lenders may begin making Community Advantage loans immediately. SBA will continue approving lenders on a rolling basis.
Expanding opportunities for entrepreneurs and small business owners in underserved communities is core to SBA’s mission. As a result, all of SBA’s programs are having an impact in underserved communities. In addition to the Community Advantage pilot program, in December SBA announced the new Small Loan Advantage, which is open to the agency’s 630 existing Preferred Lenders.
Both Community Advantage and Small Loan Advantage offer a streamlined application process for SBA-guaranteed 7(a) loans up to $250,000. Advantage loans will come with the regular 7(a) government guarantee, 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000.
Posted at 7:52 AM