SBA Small Business Loan Advantage Programs–How Much Can Businesses Benefit And Borrow

The Small Business Administration’s small business loan Advantage Programs have been in the news as of late due to the fact that these new initiatives began on February 15, 2011, and are set to offer more capital to small businesses and organizations that have either had difficulty acquiring these small business funds or who are an underserved communities and may have fewer options at borrowing to either establish or grow their business. The Small Business Administration has offered these programs as a way to benefit particular businesses, but they have also set a limit on the size that a borrower may be able to acquire through these programs as a way to streamline the application process in the hopes of getting funds to qualified companies in a timelier manner.

For both the Small Loan Advantage program and the Community Advantage program, the maximum size that these borrowers can acquire is $250,000, which is a sizable sum for many small business owners who may be looking to either form a business or grow in an underserved area where an injection of capital can do a great deal towards pushing a company further into prosperity. Obviously, there have been mixed messages in terms of small business lending over the past months as companies have complained that lenders have been tight with their practices, while many financial institutions have stated they were cautious but the willingness of many businesses to borrow has also been low.

Yet, the Small Loan Advantage program is open to financial institutions that are participating in the SBA’s Preferred Lender Program, and the Community Advantage program, according to the SBA, “…is open to mission-focused lenders, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. Community Advantage lenders will be expected to maintain at least 60 percent of their SBA loan portfolio in underserved markets.”

Also, borrowers may benefit from a more streamlined application process as both of these programs have reportedly been set up in a way that rewuires applicants to only fill out a two-page application, but small businesses need to keep in mind that this does not guarantee that these funds will be available for their particular situation. Obviously, the benefits of these programs are hoped to be manifest in a way that will give more options to men and women who are looking to prosper their business in either an underserved area or in situations where traditional loans from major financial institutions are simply unavailable due to tight lending practices.

While it has been stated that many banks are beginning to loosen their lending practices and are opening the door on credit opportunities, SBA loans which offer guarantees to financial institutions who work with borrowers through these particular programs, were popular last year when many companies felt that getting a small business loan was simply impossible. Obviously, there is some uncertainty still in the economy and banks are wanting to err on the side of caution, but when they can offer companies these loans and also have the SBA guarantee a percentage of what they lend, financial institutions from large to small banks can now help provide these companies with more funds that will hopefully get the economy to a stronger level by bringing more businesses into a prosperous condition and, hopefully, will help with job creation.