Vice President Kamala Harris and Isabel Guzman, administrator of the U.S. Small Business Administration, recently announced reforms to the agency’s Community Advantage loan program, a key SBA tool for Community Development Financial Institutions, Community Development Companies, microlenders and other critical mission-based lending partners that prioritizes equitable access to capital for low-income borrowers and those from underserved communities.
“America’s mission-driven lenders have been a critical partner to the SBA in getting much-needed financial relief to underserved businesses throughout the COVID pandemic,” Guzman said. “Scaling the SBA’s Community Advantage pilot program will help us build on that momentum, create a broader distribution network, and better ensure that the opportunities of our nation’s accelerating recovery are accessible to more entrepreneurs pursuing their American dreams of starting and growing a successful business. The Community Advantage pilot expansion and reforms reflect the central role that President Biden and Vice President Harris have given to building equity across this Administration and removing historic inequities and barriers that have limited economic growth for all.”
Among the reforms announced, the SBA will:
- Extend the pilot program to September 30, 2024, providing more certainty for the Community Advantage program, which was set to end this September.
- Lift the four-year lender moratorium and enable the SBA to grow this lender network, opening up a critical capital program to more mission-based lenders across the country.
- Increase the maximum loan size; the expanded number of lenders will be allowed to access the SBA’s 7(a) government-guaranteed loan program at lending levels up to $350,000, which represent an increase over the current levels of $250,000.
- Remove restrictions that can keep individuals with criminal backgrounds from accessing the Community Advantage program.
- Simplify underwriting and collateral requirements for borrowers and lenders, including increasing the maximum unsecured loan size from $25,000 to $50,000, removing barriers that disproportionally impact underserved borrowers.
- Introduce additional abilities for lenders to make revolvers and lines of credit, interest-only periods and other loan modifications that meet borrowers where they are to best serve their capital needs.
To learn more about Community Advantage and additional small-business financial assistance programs, visit www.sba.gov.
