New SBA Loan Programs Target Minorities, Underserved
Here’s a piece I did for Politic365.com:
The Small Business Administration recently announced that it is launching two new loan programs to help small businesses, particularly those in underserved, low income and urban communities, hardest hit by the slump in the economy. Acknowledging that many minority groups were disproportionately affected by the recession, the SBA introduced two new loan initiatives: the Small Loan Advantage and Community Advantage. The Small Loan Advantage will enable 630 of the SBA’s preferred lenders to provide loans up to $250,000 to small community businesses in low to moderate-income neighborhoods of designated cities.
The loans will become available via a streamlined application process. Applicants would only have to fill out 2 pages of paperwork and could be guaranteed approval within ten days, according to the SBA. The agency is hoping to counter the challenge small businesses have been facing due to credit sources drying up. The government hopes the increase in credit will help small firms grow, hire and provide a boost to the economy.
The Community Advantage program will enable existing financial institutions that already have a successful record of providing loans, money management assistance and support in emerging communities to become SBA preferred lenders. Previously, those institutions had not been among the SBA preferred lender program. Yet, SBA Deputy Administrator Marie Johns said the government recognizes the value those lending sources bring through their proven track record and comprehensive approach to lending.
“Over the last two years, we’ve seen lending to all small businesses tighten up, and that tightening has been even greater in traditionally underserved communities, including among minorities, women and in rural areas,” said SBA Administrator has Karen Mills.
“These new Advantage initiatives are aimed directly at getting more loans into these markets so these small business owners can get the capital they need to start or grow their business and create good paying jobs in local communities across the country.”
The loans will be offered through the SBA’s existing 7(a) lending program which allows lenders to make loans submitted electronically and guarantee approval within minutes and even up to one business day, in some cases.
The SBA also announced that Catherine Hughes, Chairwoman and Founder of Radio One Inc., and a former SBA borrower, will chair the agency’s new Advisory Council on Underserved Communities.
“Many entrepreneurs and small business owners across the country have enormous potential to drive economic growth and create good-paying jobs in their local communities, but too often they face barriers in fulfilling that potential,” said Catherine Hughes in a written statement