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Office of Capital Access | Resources

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.  SBA and U.S. Department of Commerce have conducted studies that show the importance of lower dollar loans to small business formation and growth in underserved communities.  The need to encourage lenders to provide an increased number of lower-dollar loans to small business is evident.

One of the initiatives SBA rolled out aimed at increasing the number of lower-dollar loans in the underserved communities is called the Small Loan Advantage Program.  This initiative allows lenders to get a pre-qualification indication from SBA that the applicant business has sufficient creditworthiness to warrant giving the applicant full consideration for financing.

Small Loan Advantage

  • The small business applicant applies for financial assistance from an SBA approved lender.

  • The lender decides if the request will require an SBA guaranty.

  • To help the lender decide creditworthiness for lower-dollar loans, the lender can obtain certain data from the applicant and then get a pre-qualification indication from SBA as to the acceptability of the applicant for a loan guaranty.

  • If the pre-qualification comes back positive, the lender may complete a streamlined credit memo and make a formal request to SBA for guaranty.

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

  • Maximum Loan Size: $350,000

  • 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 a two-page application for borrowers after the lender has decided to apply for an SBA guaranty for the proposed loan. The lender completes a credit memo and may use their own loan note.

  • Lender Requirements:Small Loan Advantage is open to all financial institutions with an executed loan guaranty agreement with the SBA (currently over 7,500 lenders across the nation).

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

  • SLA Credit Score: The SLA credit score is calculated based on a combination of consumer credit bureau data, business bureau data, borrower financials, and application data. It is an origination score. (The SLA credit score is not to be confused with the Small Business Predictive Score (SBPS) used by SBA’s Office of Credit Risk Management, which is a management score.) The minimum SLA credit score is based on the lower end of the risk profile of the current SBA portfolio and may be adjusted up or down from time to time. The minimum credit score required for the application to be processed as an SLA application is 140.  If it falls below this credit score, the application may be submitted under our other loan programs.

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.