SBA Community Advantage Program Announcement
Administrator Isabel Guzman, at the helm of the U.S. Small Business Administration (SBA) and the advocate for America’s 33 million small businesses in President Biden’s Cabinet, has announced a significant development. The SBA has now permanently established its mission-lending Community Advantage Program, thanks to recent rule changes and the introduction of 143 Community Advantage Small Business Lending Companies (CA SBLCs). This move secures a permanent role for mission-based lenders in SBA lending, enabling them to continue serving small businesses in underserved markets, building upon the success of the Community Advantage Pilot Program spanning more than a decade.
Closing Capital Gaps for Underserved Entrepreneurs
SBA Administrator Isabel Guzman highlights the critical importance of access to capital for entrepreneurs seeking to create jobs or initiate and expand their businesses, particularly for women, people of color, veterans, and those in rural and LMI (Low to Moderate-Income) communities. She notes that under the Biden-Harris Administration, the SBA has made it a priority to bridge longstanding capital gaps by increasing the number of lenders focused on underserved markets. This strategic move empowers highly entrepreneurial communities to play a pivotal role in driving the nation’s economy. Thanks to transformative regulatory reforms, the SBA has now permanently expanded the number of mission-driven lenders in the Community Advantage SBLC program to over 140, fortifying their role in funding and fueling the small business landscape while aligning with the President’s Invest in America economic agenda.
Supporting Underinvested Small Businesses
Harold Pettigrew, President and CEO at Opportunity Finance Network, underscores the significance of the new Community Advantage Small Business Lending Company (CA-SBLC) licenses within the 7(a) Loan Program. These licenses ensure that mission lenders, such as Community Development Financial Institutions (CDFIs), can continue their vital collaboration with the SBA to support small businesses across the nation. After more than a decade as a pilot program, the CA-SBLC license provides certainty to underinvested small businesses and the specialized lenders dedicated to serving them. Administrator Guzman’s leadership and the SBA’s efforts to revitalize this underutilized program have been commended, as these actions equip entrepreneurs with the tools and resources needed to address persistent capital disparities.
A Strengthened Network of CA SBLCs
The SBA’s enhanced network of CA SBLCs includes all 112 of the Community Advantage Pilot Lenders that expressed their desire to continue SBA lending. These lenders collectively represent 99.8% of the original CA Pilot Program’s lending portfolio, in addition to 31 new mission lenders approved within the last two months.
Transition from Pilot to Permanence
The Community Advantage Loan Pilot Program, initially launched during the Obama-Biden Administration and set to expire in 2022, has been extended by the Biden-Harris Administration. However, it is scheduled to conclude on October 31, 2023, paving the way for the permanent role of CA SBLCs within the SBA lending ecosystem.
Impressive Growth and Impact
The Community Advantage Pilot Program has witnessed significant growth during the Biden-Harris Administration, with lending exceeding $141 million in fiscal year 2023 (FY23), a notable increase from $86 million in FY20. These Community Advantage lenders have been instrumental in serving businesses that have historically faced barriers in accessing capital due to limited financial resources and systemic obstacles. The Pilot Program has contributed to small-dollar lending outcomes that have benefited Black and Brown borrowers.
