On Feb. 15, the Small Business Administration will be expanding lending programs. Small Loan Advantage and Community Advantage are both programs aimed at increasing lending to very small businesses. The federal government guarantees these loans, in hopes of not having to eventually pay up. People searching for personal loans now have one more place to turn.
SBA’s Small Loan Advantage program
The Small Business Administration is a government-supported program intended to help small businesses grow and expand. Banks have been unwilling to lend this though for any small businesses wanting less than $250,000. Banks don’t think it is “worth it” to lend to small businesses as a result of the time, money and effort an SBA loan takes to underwrite. About 75 % of loans that go up to $150,000 and about 85 percent of loans that go between $150,001 and $250,000 could be guaranteed with the Small Loan Advantage program. The hope is that these guarantees will encourage large banks to make small loans to businesses.
What the Community Advantage program with SBA is
The number of lenders that serve groups that are minority and undeserved will increase with the SBA 7(a) Community Advantage program. The program will certify “mission-focused community institutions” as SBA lenders. New lending institutions that aren’t just the normal banks will be created with the program. The under-lent groups are targeted. These include ones in Louisiana and Texas. The “community institutions” can be applied for on Feb 15 with the SBA.
Information on SBA lending
Small Loan Advantage or Community Advantage is part of SBA lending. It is part of the traditional lending that occurs. Banks do the loans just like traditional loans. They are underwritten and distributed. Some businesses will realize these loans are easier than poor credit loans and faxless paydayloans since the government backs these loans.
Citations
Biz Journal
bizjournals.com/philadelphia/blog/athena-merritt/2011/02/sba-minority-lending-programs-start.html
Business Wire
businesswire.com/news/home/20110210006308/en/SBA-Lending-Initiatives-Underserved-Communities-Launch-Feb.
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