There’s new funding in town for startups, newly established businesses and growing small businesses under a program sponsored by the U.S. Small Business Administration. Community lenders participating in the Intermediary Lending Pilot program will start making loans of up to $200,000 to businesses that qualify.
Authorized under the Small Business Jobs Act of 2010, the ILP program will provide direct loans of up to $1 million to 20 private, nonprofit community organizations during fiscal 2011. They, in turn, will use those funds to help finance small businesses, mostly in underserved markets .
The ILP program addresses gaps in financing that accompanied the economic downturn, such as the limited availability of commercial loans of $200,000 or less; borrowers who have declining collateral values or lower credit scores; and commercial lenders that have less funding available for loans and a lower appetite for risk, leading to tighter underwriting standards.
Designed to expand small businesses' access to capital and drive economic growth and job creation, the program will fund 20 additional community lenders in the next fiscal year. The program will be in effect through fiscal year 2013, subject to appropriation by Congress.
"The Intermediary Lending program is an important new tool to support businesses in underserved markets," said SBA deputy administrator Marie Johns. "Partnering with community lenders will increase points of access to capital for startups and businesses that have been disproportionately affected by the recession."
One goal of the pilot program over the next two to three years is to assess the intermediary model as a tool for increasing lower-dollar lending to small businesses and startups, particularly those in traditionally underserved communities.
More information about the ILP program is available by visiting the program website.
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