Newsroom

Feb. 14, 2011 – Credit unions will have more opportunities to make small business loans to underserved communities via two new initiatives that the Small Business Administration is launching tomorrow.

Starting Feb. 15, any financial institution that participates in the SBA Preferred Lender Program can approve loans using the new Small Loan Advantage process. SBA said it is delegating the final credit decisions to these lenders to help expedite the process. The PLP currently counts 610 financial institutions as participants, including most of the agency's highest-volume lenders.

In addition, the SBA will begin accepting applications tomorrow for its new Community Advantage program, which expands the eligibility of the SBA's 7(a) loan program to "mission-focused" financial institutions, including community development financial institutions, certified development companies and nonprofit microlending intermediaries.

SBA said the program aims to "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."

Both programs utilize 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. SBA is encouraging community-based organizations that are interested in becoming Advantage lenders to contact the closest SBA district office.

Both programs were first announced in December as part of the agency's efforts to bolster lending to small businesses and entrepreneurs in underserved communities, with the ultimate goal of spurring job creation.