The first batch of lenders to make Community Advantage loans to small businesses in traditionally underserved communities has been approved, the Small Business Administration announced. The six community-based, mission-focused lenders will start taking loan applications immediately.
The Community Advantage program was announced by the SBA in December. The program’s mission is to expand access to lower-dollar loans and lending in underserved communities. Research has shown that such loans are critical to small-business formation and growth in these communities.
The pilot aims to expand access to capital for small-business owners by opening SBA’s 7(a) loan program to these financial institutions, including Community Development Financial Institutions, the SBA’s Certified Development Companies and its nonprofit microlending intermediaries.
Community Advantage builds on the experience these institutions already have in lending in economically challenged markets, along with their management and technical assistance expertise to help make their borrowers successful.
"Working with these community-based, mission-focused lenders will greatly enhance our ability to bring much needed financial backing to small businesses in underserved communities, which include minority-, women- and veteran-owned, as well as rural businesses," Karen Mills, the SBS administrator, said in a statement. "These businesses are among the hardest hit by the recent economic downturn and helping them to recover, expand and create jobs will strengthen both their local and our nation’s economy."
Although SBA loans are three to five times more likely to go to women- and minority-owned businesses , underserved communities were nonetheless hit disproportionately hard by the recession, the agency said.
The first six lenders approved by the SBA are Cen-Tex CDC, Austin, Texas; The Progress Fund, Greensburg, Pa.; Eastern Maine Development Corp., Bangor, Maine; Idaho-Nevada Community Development Financial Institution, Pocatello, Idaho; Kentucky Highlands Investment Corp., London, Ky.; and CDC Small Business Finance, San Diego, Calif.
The SBA said it will continue approving lenders on a rolling basis.
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Reach BusinessNewsDaily senior writer Ned Smith at email@example.com. Follow him on Twitter @nedbsmith.