On August 1, the U.S. Small Business Administration (SBA) began implementing changes aimed at expanding small businesses’ access to capital.
The improvements to the 7(a) and 504 loan programs will increase small businesses’ ability to access financing to start and grow through a broader network of lenders with streamlined procedures.
The SBA has also made it easier to understand who qualifies for a loan by clarifying affiliation standards, which can determine which businesses count as “small.”New Opportunities
According to the SBA, the new streamlined guidelines for lenders are part of three updated standard operating procedures, including updated origination policies and procedures, lender participation requirements, and 7(a) loan servicing and liquidation requirements.
In doing so, the SBA provides additional flexibility in credit criteria for loans under $500,000, in order to reach small businesses with greater credit capacity.
“The SBA has made it easier to understand who qualifies for a loan by clarifying affiliation standards, which can determine which businesses count as ‘small’ and is now bringing eligibility determination in-house through technology updates,” the government highlighted.
The SBA will use advanced data analytics and third-party data checks to track all loan programs for fraud before approval.Reducing Barriers
The SBA continues to advocate for the removal of long-standing barriers that various entrepreneurs face when trying to access financial support.
“These changes include the permanence of SBA loans for mission-driven organizations, such as Community Development Financial Institutions (CDFIs), which have a track record of filling capital gaps in underserved communities, but previously participated in SBA loans through a temporary pilot program called Community Advantage. These lenders are ensuring permanence in the 7(a) Loan Program by becoming Community Advantage Small Business Lending Companies (CASBLCs),” noted the SBA.