SBA Improves Loan Access and Expedites Approvals


New Policies Remove Hurdles for Entrepreneurs and Simplify Lenders’ Tasks

Last Tuesday, the Small Business Administration began using refined policies that expand access to capital by updating the federal agency’s 7(a) and 504 Loan Programs. SBA Administrator Isabella Casillas Guzman says the policy changes, which already are in effect, will counter longtime gaps in capital access for female, veteran and minority business owners as well as enterprises that are located in rural areas. 

One big plus for franchisees is that the SBA has clarified affiliation standards that ascertain which businesses qualify as “small.” The new policies also offer added flexibility in credit prerequisites for loans of less than $500,000.

More Lenders, Less Red Tape

In an SBA news release announcing the policies, the agency said the changes will accomplish these two goals: 1) provide a larger group of lenders and 2) give lenders a streamlined set of procedures to follow in order to gain approval for SBA loans. The streamlining affects loan origination policies and procedures, lender participation requirements, and 7(a) loan servicing and liquidation requirements. 

Technology improvements assist in that streamlining, with the SBA will no longer requiring duplicated data entry in the Loan Authorization Wizard. Instead, enhanced technology allows it to use already-supplied information to electronically generate its terms and conditions sheet. 

Another over-arching result of technology upgrades is that the SBA can now carry out eligibility determination in-house. 

All of these changes mean that both business owners and lenders will be able to learn who is qualified for borrowing more quickly. Once that threshold has been passed, SBA employees will utilize advanced data analytics and third-party data checks for fraud review on all loan programs before lending is approved.  

Win-Win for Borrowers and Lenders

In its news release, the SBA said that the new policies will help small business owners, especially those in underserved communities who have struggled to get loans for starting or expanding their enterprises. These changes include permanency in SBA lending for mission-driven organizations like community development financial institutions with a history of aiding entrepreneurs in underserved communities and previously participated in SBA lending through a temporary pilot program called Community Advantage. Their permanent status is established in the Community Advantage Small Business Lending Companies (CASBLCs) under the 7(a) Loan Program.   

The SBA has more details about the changes on its website. The information is referenced under the following standard operating procedures (SOPs) numbers and titles: SOP 50 10 7: Lender and Development Company Loan Programs, SOP 50 56: Lender participation requirements, and SOP 50 57: 7(a) Loan Servicing and Liquidation.  

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