Stay Informed!

By Lauren Stebbins on 01/27/2011 @ 03:43 PM

Tags: Innovation, entrepreneurship, economic inclusion

This year the Small Business Administration (SBA) is launching two new programs, Small Loan Advantage and Community Advantage, to expand access to capital for underserved small businesses. Such businesses often experience difficulty in securing loans from mainstream financial institutions which typically do not offer small loans because of their low profitability. The SBA’s Advantage Programs are designed to fuel economic growth in underserved communities by increasing access to small loans for these businesses.  

The Small Loan Advantage Program encourages larger SBA lenders to offer small loans through streamlined paperwork, quick approval times (minutes for Small Advantage Loans submitted through the e-Tran system and one business day for all other loans), a $250,000 loan amount maximum and a higher guarantee for loans below $150,000 (85% compared to 75% for loans over $150,000).  

The Community Advantage Program is a three-year pilot to increase the number of SBA 7(a) lenders in underserved communities. The pilot is focusing on mission-driven financial institutions (e.g., CDFIs, CDCs) that previously have not been able to offer SBA loans. As with the Small Advantage Loan Program, the required paperwork is streamlined and the maximum loan amount is $250,000 with a higher guarantee for loans under $150,000. The approval time for Community Advantage loans however is 5 – 10 business days.  

Both programs are scheduled to be implemented beginning March 15, 2011. Applications from mission-driven financial institutions for the Community Advantage Program are being accepted starting on or before February 15. For more information, check out the SBA press announcement.

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