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The US Small Business Administration has announced changes to its popular 7(a) and 504 loan programs it hopes will make the process of getting a loan easier and seamless for small businesses.
These updates are geared towards upgrading, streamlining and simplifying systems and adding more flexibility to credit criteria in getting a small business loan under $500,000, the SBA said.
Under the updates, the SBA said it clarified its affiliation standards which determine which businesses count as “small,” helping lenders and small businesses know who qualifies for an SBA loan upfront. It also said it improved in-house technologies to check for borrower eligibility and potential fraud before the loans get approval.
The new program also streamlined information requirements for lenders, making it easier to work with SBA. For example, SBA no longer requires duplicative data entry in its Loan Authorization Wizard software and instead will use information already entered into the system to produce a terms and conditions sheet electronically.
The SBA said a new feature of the update is the “Universal Purchase Package,” which will streamline the process for lenders to request SBA honor its loan guaranty. It will also introduce a new set of features in its online platform E-TRAN, which lenders use to upload loan applications.
“SBA recognizes that 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. These changes include permanency in SBA lending for mission-driven organizations like Community Development Financial Institutions (CDFIs), which have a track record of filling capital gaps in underserved communities but were previously participating in SBA lending through a temporary pilot program called Community Advantage. These lenders are securing permanency in the 7(a) Loan Program by becoming Community Advantage Small Business Lending Companies,” the SBA said in a statement.
The changes come days after the SBA also doubled the size of loan limits for its home disaster loan program from $200,000 to $500,000.
