Priming the Lending Pump for Small Business: SLA 2.0

SBA prides itself on opening more doors to more dollars in every community, creating an American economy built to last. Expanding access to capital and opportunity is critical to fulfilling SBA’s mission- especially in underserved communities. Knowing that we can do more, SBA is constantly working to remain responsive to the needs of small business owners and the lenders who serve them daily. 

Studies have shown the importance of low dollar loans to small business formation and growth in underserved communities. However, low-dollar loans can be costly to lenders- processing a $50,000 loan costs nearly as much as processing a $1 million loan with less profit.  Last year, in an effort to encourage more small-dollar lending in underserved communities, SBA rolled out a new program called Small Loan Advantage (SLA). The program simplified the application process for 7(a) loan up to $250,000. SLA offered lenders the opportunity to invest in neighborhoods hardest hit by the recession- putting more loans into the hands of small businesses and entrepreneurs through a faster, streamlined process.

Today, taking into account feedback from our lending partners, SBA is re-launching the Small Loan Advantage program as SLA 2.0. SLA 2.0 makes it even easier to process low dollar 7(a) loans by expanding the pool of lenders to include entities outside of our Preferred Lender Program . We also increased the loan limit for the program to $350,000, lining it up with our other loan products. These changes allow banks to use their own documentation underwriting process. Further, the SBA will credit score each loan in advance of approval which enables us to better manage the agency’s risk, while ensuring an efficient process. This creates a win-win situation for lenders and communities- establishing a streamlined process that reduces lender transaction cost and increases access to capital for small businesses and entrepreneurs in underserved communities.

Today, small business optimism is at its highest level since 2008 and we see the recovery taking hold where we need it the most, on the Main Streets of America. With innovative programs like SLA 2.0, SBA and the Obama Administration remain committed to seeing that trend continue in our underserved communities across this country, creating a resilient, robust national economy built to last.