In an effort to stimulate economic growth and job creation in underserved communities, the SBA introduced two new initiatives this past February. The new Advantage Loan Initiatives offer a “streamlined application process for SBA 7(a) up to $250,000.” These programs are an effort to increase lower dollar loans as studies have shown that such loans are instrumental to growth in underserved communities and to new business formation. The chart below shows the comparison between a Small Loan Advantage and Community Advantage:
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Small Loan Advantage |
Community Advantage |
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| SBA’s stated purpose: | Small Loan Advantage is structured to encourage larger, existing SBA lenders to make lower-dollar loans, which often benefit businesses in underserved markets. | Community Advantage is a pilot initiative aimed at increasing the number of SBA 7(a) lenders who reach underserved communities, targeting community-based, mission-focused financial institutions which were previously not able to offer SBA loans. It is a three year program. |
| Maximum Loan Size: | $250,000 | $250,000 |
| Guarantee: | 85 percent for loans up to $150,000 75 percent for those greater than $150,000 | 85 percent for loans up to $150,000 75 percent for those greater than $150,000 |
| Approval Times: | Most Small Loan Advantage loans will be approved in a matter of minutes through electronic submission (e-Tran). Non-delegated Small Loan Advantage loans will be approved within 5 to 10 days. | Most Community Advantage loans will be approved within 5 to 10 days. |
| Paperwork: | Small Loan Advantage features streamlined paperwork, with a two-page application for borrowers and lenders can use their own note and guaranty agreement. | Community Advantage features streamlined paperwork, with a two-page application for borrowers. |
| Lender Requirements: | Small Loan Advantage is open to financial institutions (currently 630 lenders) participating in SBA’s Preferred Lender Program (PLP). | Community Advantage is open to mission-focused lenders, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. Community Advantage lenders will be expected to maintain at least 60 percent of their SBA loan portfolio in underserved markets. |
