SBA Implements Policies to Expand Funding Access
The U.S. Small Business Administration implemented new policies to expand access to funding for small businesses, particularly in underserved communities.
The changes to SBA’s 7(a) and 504 loan programs are aimed at addressing gaps in capital access for rural, veteran, women, and minority-owned businesses.
The new guidelines went into effect Aug. 1. The goal is to provide a broader network of lenders for small businesses as well as streamlined lender procedures.
The updated standard operating procedures include:
- Origination policies and procedures
- Lender participation requirements
- 7(a) loan servicing and liquidation requirements
Under the new guidelines, SBA is providing more flexibility in credit criteria for loans under $500,000 to reach more small businesses.
SBA also clarified who qualifies for a small business loan and upgraded technology to bring eligibility determination in-house.
The goal is to help lenders and small businesses know who qualifies up front.
SBA said it increased fraud protection through data analytics and third-party checks on all loan programs before approval.
Information requirements were also streamlined for lenders, meaning SBA will use information already entered in its system.
The changes include permanency in SBA lending for mission-driven organizations with a track record of filling capital gaps in underserved communities.
Those organizations were previously participating in a temporary pilot program.
In a news release, SBA said “small businesses, particularly those owned by individuals in underserved communities who are highly entrepreneurial, still face long-standing barriers in accessing capital needed to start or grow their businesses.”
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