Main Street Monday – Community Advantage Lenders Given Permanence with New SBLC Licenses

May 1, 2023

Delaney Sexton
Contributing Editor

Main Street Monday – Community Advantage Lenders Given Permanence with New SBLC Licenses

The current definition of underserved markets includes rural, low to moderate income, HUBZones, start-ups, and veteran-owned businesses. Women-owned and minority-owned small businesses are excluded from the label of underserved markets. Although they do not fall under the definition of underserved, populations such as women, minorities, tribal groups, and others are often in the inner cities and rural areas that are regarded as underserved communities.

In the 7(a) program and 504 program, lenders make roughly 50% of their loans to businesses that fit the current definition of underserved markets regardless of the type of lender or loan size. The SBA’s Community Advantage loan program further targets these groups by requiring participating lenders to maintain at least 60% of their loan portfolio in underserved markets.

As part of the recent final rules, the SBA is seeking to provide permanence to Community Advantage lenders by creating Community Advantage SBLC licenses. The pilot program is set to expire on September 30, 2024, but with the new rule, current CA lenders will transition into Community Advantage SBLC licenses to ensure their continued participation in serving underserved markets.

Also in support of the SBA’s mission, the SBA Council on Underserved Communities aids the SBA’s efforts to expand its reach into these underserved communities. The Council extends input, advice, and recommendations on how to increase capital access and promote sustainability, growth, and job creation.

Senate Committee Hearing