Special to the Recorder
Lenders who participate in the U.S. Small Business Administration’s Preferred Lender Program can approve loans through the agency’s new small loan advantage program that started Feb. 15.
At the same time, the agency will begin accepting applications from community-based, mission-focused lenders who are interested in making SBA-guaranteed loans through the new community advantage program.
Both the Small Loan Advantage and Community Advantage programs were announced last December as part of the agency’s efforts to increase the number of lower dollar loans being made to small businesses and entrepreneurs in underserved communities.
“Businesses in underserved communities, including minority and women-owned as well as businesses in rural areas, have been among the hardest hit by the economic downturn,” said SBA Administrator Karen Mills. “These two new initiatives can provide critical support to help these businesses and entrepreneurs get much needed financing to start and grow, which will translate into more jobs in these communities.”
Built on what the agency refers to as its “advantage” platform, both Small Loan Advantage and Community 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.
Beginning Feb. 15, any of the 610 financial institutions across the country in the SBA’s preferred lender program (PLP) can approve loans using the new Small Loan Advantage process. Under PLP, which includes most of the agency’s highest volume lenders, SBA delegates the final credit decisions to these lenders.
The SBA is also accepting applications from financial institutions that are interested in becoming Community Advantage lenders. Through Community Advantage, the agency will expand the points of access small business owners have for getting loans by opening SBA’s 7(a) loan program to “mission-focused” financial institutions, including community development financial institutions, SBA’s certified development companies and SBA’s nonprofit microlending intermediaries.
SBA said Community Advantage will leverage the experience these institutions already have in lending to minority, women-owned and start-up companies in economically challenged markets, along with their management and technical assistance expertise, to help make their borrowers successful.