Vice President Kamala Harris and Administrator Isabella Casillas Guzman, head of the US Small Business Administration (SBA) announced reforms to the agency’s Community Advantage (CA) loan program, a key SBA tool for Community Development Financial Institutions (CDFIs), Community Development Companies (CDCs), microlenders and other critical mission-based lending partners, that prioritizes equitable access to capital for low-income borrowers and those from underserved communities.
Among the reforms being announced today for the Community Advantage program, the SBA will:
- Extend the pilot program to September 30, 2024, providing more certainty for the Community Advantage program, which was set to end in September 2022.
- Lift the four-year lender moratorium and enable the SBA to grow this important lender network, opening a critical capital program to more mission-based lenders across the country.
- Increase the maximum loan size, the new 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 the 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 disproportionately 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.
- Redefine packaging fee guidelines to better enable CDFIs, CDCs, and mission lenders participating in the Community Advantage program to scale and increase volume to 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. Scaling the SBA’s Community Advantage pilot program will help us build on that momentum, create a broader distribution network, and better ensure the opportunities of our nation’s accelerating recovery are accessible to more entrepreneurs pursuing their American dreams of starting and growing a successful business,” said Administrator Guzman. There are around 32.5 million small businesses in the United States.