WASHINGTON, D.C.--The U.S. Small Business Administration (SBA) has unveiled two new initiatives to increase lending opportunities for small business owners in inner cities and underserved communities.
Under the two initiatives, known as the Small Loan Advantage and the Community Advantage, community banks will be able to offer loans of up to $250,000. Those loans, which are part of the agency's 7(a) program, come with the government guarantee of 75 percent guarantee while anything under $150,000 comes with the 85 percent guarantee.
They target start-up and growing firms.
The Small Loan Advantage features a streamlined two-page application and allows lenders to use their own note and guarantee agreements. Eligible financial institutions include those participating in the SBA's preferred lender program.
Most loans in this program can be approved in a matter of minutes through the electronic submission program; others will take five to 10 days to approve.
Community Advantage is a three-year pilot program designed to encourage more organizations, particularly Community Development Financial Institutions, to become SBA lenders.
This program also features the streamlined two-page application and approval in five to 10 days. Additionally, those granted loans will obtain technical assistance from the lenders.
In addition to the new loan programs, the SBA named Cathy Hughes, chairwoman and founder of Radio One, to chair the newly formed Advisory Council on Underserved Communities.
"I'm excited to be a part of this effort to strengthen the link between these entrepreneurs and the SBA's wide variety of resources," Hughes said in a statement. "SBA assistance played a critical role in my success, and I'm eager to do all I can to help make sure others have access to these same opportunities."
"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," SBA Administrator Karen Mills said in a statement. "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."