U.S. Small Business Administration Now Accepting Applications for Small Business Lending Company License
Expanding Access to Small, Affordable Loans for Millions of Small Business Owners
Washington, D.C. – The U.S. Small Business Administration (SBA) has taken a significant step towards increasing access to small and affordable loans for millions of small business owners. For the first time in over 40 years, the SBA is now accepting applications for Small Business Lending Company (SBLC) licenses. This move aims to empower lending organizations and expand the availability of responsible small business lending. The application window is open from June 1, 2023, to July 31, 2023.
Empowering Lenders to Support Small Business Growth
SBLC licenses provide selected non-depository lenders with the opportunity to leverage government guarantees when underwriting small business loans. By reducing the risk to lenders and the cost to borrowers, SBLCs can write higher volumes of loans to small businesses compared to traditional lending methods. Currently, there are 14 SBLC licenses in the marketplace. However, a recent SBA rule has lifted the moratorium on additional licenses, enabling up to three new licenses to be issued to qualified lenders based on a thorough review of applications received during this application window.
Administrator Guzman Recognizes the Vital Role of Small Businesses
Administrator Isabella Casillas Guzman, the head of the SBA, emphasizes the essential role of small businesses in the economy. She recognizes the need for capital to fuel their growth and support President Biden’s Investing in America agenda. By expanding SBA’s loan programs, more borrowers will have access to funding through an extensive network of lenders. This initiative aims to contribute to a strengthened American economy that fosters innovation, manufacturing, and the provision of products and services that improve our lives.
Criteria for New SBLC Applicants
The SBA will evaluate new SBLC applicants based on various criteria to ensure alignment with the organization’s mission and responsible lending practices. Some of the factors considered include lending policies, historical performance measures such as default, purchase, and loss rates, legal proceedings or regulatory concerns, performance data associated with the applicant, and information on small business lending gaps not served by existing lenders. Additionally, factors such as affiliation with previously sanctioned lenders and compliance with regulatory requirements will be taken into account.
Application Process and Resources
Prospective SBLC applicants can find detailed information on the application process on the Federal Register website at https://www.federalregister.gov/documents/2023/05/22/2023-10310/small-business-lending-company-application-process.
Modernizing Loan Programs and Supporting Underserved Markets
This announcement reflects the SBA’s ongoing efforts to modernize its loan programs, making them more efficient and less burdensome for lenders. The SBA’s initiatives extend to over 1,700 depository banks and credit unions that participated in SBA loans during the last fiscal year, creating a more accessible financing landscape for small businesses across the country.
The expansion of SBLC licenses aligns with the SBA’s commitment to supporting underserved markets. In May, the SBA outlined steps for Community Advantage Pilot Program lenders to transition to a new Community Advantage SBLC license. Currently, over 100 non-depository lenders participate in the SBA’s flagship 7(a) Loan Program under the Community Advantage Pilot Program, but they only hold temporary status. These lenders have demonstrated a higher rate of lending to small, minority-owned, women-owned, and veteran-owned businesses. Granting permanent status to these lenders, including Certified Development Companies and Community Development Financial Institutions (CDFIs), will further enhance their impact in underserved markets.
Transitioning to a Permanent Community Advantage SBLC License
Community Advantage Pilot Program lenders interested in transitioning to a permanent Community Advantage SBLC License can find more information at https://www.sba.gov/document/information-notice-5000-846918-community-advantage-small-business-lending-company. This transition promises to solidify their role in supporting underserved markets and promoting economic growth in local communities.
The SBA’s acceptance of new SBLC license applications represents a significant opportunity for lenders and small business owners alike. By expanding access to capital through a broader network of lenders, the SBA aims to build a resilient American economy that thrives on the innovation and success of small businesses.
Remember, the SBA is dedicated to helping you succeed!
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