News & Events

Strengthening Opportunities, Streamlining Procedures, and Combating Fraud

Introduction

The Biden-Harris Administration has unveiled new plans to enhance and modernize loan programs, aiming to increase access to capital for small businesses, particularly through small-dollar loans, while also strengthening protection against fraud. These program improvements, finalized in April, will have a significant impact on expanding capital opportunities for small businesses.

Small Business Administration’s Focus on Growth, Resilience, and Innovation

Recognizing the crucial role played by small businesses in driving the economy, Administrator Isabella Casillas Guzman emphasizes the need for capital to support their growth, resilience, and innovation. The ongoing modernization of the Small Business Administration’s (SBA) loan programs will enable more borrowers to secure funding from an expanded network of lenders, contributing to a strengthened American economy.

Addressing Persistent Barriers for Underserved Communities

Despite significant economic progress, small businesses, particularly those owned by individuals in underserved communities, continue to face barriers in accessing capital. SBA acknowledges these challenges and plans to streamline the eligibility determination process for SBA-backed loans, alleviating burdens on lenders and focusing more on customers.

Strengthened Fraud Protection Measures

SBA introduces a comprehensive fraud review for loans in the 7(a) and 504 Loan Programs. By utilizing advanced data analytics, third-party data checks, and artificial intelligence tools, SBA aims to combat fraud effectively and aligns with President Biden’s commitment to safeguard taxpayer dollars.

Simplified Guidelines and Streamlined Operations

SBA publishes new guidelines for lenders, simplifying the process of making SBA loans through a new Standard Operating Procedure (SOP). This expansion allows a greater number of creditworthy business owners, especially those seeking small-dollar loans, to access SBA loans. Additionally, SBA simplifies and clarifies affiliation standards, easing the burden on small business owners and lenders and ensuring a more straightforward eligibility process.

Expansion of Small Business Lending Company (SBLC) Program

SBA announces an expansion of the SBLC program, inviting new lender applications. This initiative will extend loans to a greater number of small businesses, with the application period running from June 1 to July 31. SBA will select up to three new SBLCs, further strengthening access to capital for small businesses.

Continuity and Success of Primary Loan Programs

SBA’s primary loan programs, the 7(a) Loan Program and the 504 Loan Program, offer flexible financing options for various business purposes. These programs provide low-cost and long-term capital, catering to the needs of small business owners. In Fiscal Year 2022, they provided $35 billion in capital to 57,000 small businesses across the United States.

Concluding Thoughts

The Biden-Harris Administration’s modernization of loan programs under the Small Business Administration is a significant step toward enhancing small business access to capital. By strengthening opportunities, streamlining procedures, and combating fraud, these initiatives will support the growth and success of more small business owners, ultimately benefiting the American economy.

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