Small Loan Advantage

Small Loan Advantage and Community Advantage 7(a) Loan Initiatives

SBA is committed to expanding access to capital for small businesses and entrepreneurs in underserved communities so that we can help drive economic growth and job creation. In line with that, SBA is rolling out two new initiatives on February 15, 2011, aimed at increasing the number of loans in these communities.

SBA and U.S. Department of Commerce studies have shown the importance of lower dollar loans to small business formation and growth in underserved communities. With that in mind, and building on the agency’s “Advantage” platform, both Small Loan Advantage and Community Advantage will offer a streamlined application process for SBA 7(a) loans up to $250,000.

Small Loan Advantage

• Small Loan Advantage is structured to encourage larger, existing SBA lenders to make lower-dollar loans, which often benefit businesses in underserved markets.

• Maximum Loan Size: $250,000

• Guarantee: 85 percent for loans up to $150,000 and 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.

• Paperwork: Small Loan Advantage features streamlined paperwork, with a two-page application for borrowers and lenders can use their own note and guaranty agreement.

• Lender Requirements: Small Loan Advantage is open to financial institutions (currently 630 lenders) participating in SBA’s Preferred Lender Program (PLP).

• Time Frame: Lenders can begin submitting Small Loan Advantage loans on February 15, 2011.

SBA’s Preferred Lender Program

• SBA’s Preferred Lender Program (PLP) includes many of the nation’s largest lenders who do high volumes of SBA lending.

• Preferred lenders can use a streamlined paperwork process with delegated authority to approve loans, which expedites the loan approval process for small business owners and delegates the final credit decisions to these lenders.

• Lending through the new Small Loan Advantage initiative is open to all of SBA’s PLP lenders for 7(a) loans of up to $250,000 with the regular 7(a) government guarantee.