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SBA Again Seeking Community Advantage Lenders, Increases Loan Cap

  • Small Business Administration announces changes to its Community Advantage loan program
  • Program, first introduced in 2011, is designed to improve credit access to low-income borrowers and small businesses in underserved communities
  • Changes include lifting a moratorium on new lender applications to participate in the program, an extension of the program through September 2024, and raising the cap on the amount that can be borrowed through the program

By Dirk Langeveld

The Small Business Administration has extended its Community Advantage loan program, which was set to expire later this year. The agency has also announced a variety of other changes designed to make the program more flexible and accessible, including a decision to again invite lenders to become Community Advantage lenders.

The program debuted in 2011 with the goals of improving credit access to low-income borrowers and small businesses in underserved areas; allowing non-traditional lenders such as community development financial institutions, community development companies, and microlenders to participate in the SBA’s 7(a) loan program; and provide technical assistance to entrepreneurs and small business owners. Community Advantage was originally set to expire in 2014, but has been extended several times.

The latest extension ensures that the Community Advantage program will run through September 2024. It was originally set to expire in September of this year.

In October 2018, the SBA announced that it was instituting a four-year moratorium on new applications for Community Advantage lenders. The SBA has lifted this moratorium early in order to “grow this important lender network, opening up a critical capital program to more mission-based lenders across the country.”

Other changes announced by the SBA include:

  • Permitting lenders to make loans of up to $350,000 through the 7(a) program, up from the original cap of $250,000
  • Removing restrictions that barred people with criminal records from accessing the program
  • Simplifying underwriting and collateral requirements, including doubling the maximum unsecured loan amount from $25,000 to $50,000
  • Giving lenders additional flexibility in their ability to offer revolvers, lines of credit, interest-only periods, and other modifications; the SBA is also redefining its packaging fee guidelines to allow participating lenders to scale and increase loan volume to assist underserved communities

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