Butterfield Applauds New Federal Small Business Lending Programs
Washington, D.C. – Congressman G. K. Butterfield is applauding two new U.S. Small Business Administration initiatives aimed at helping underserved communities face the challenges of accessing capital.
“We have a great number of entrepreneurs and small business owners in eastern North Carolina with the potential to drive economic growth and create good-paying jobs in their local communities, but there often to many barriers to achieving success,” Butterfield said. “This gives me great hope because access to capital is often the greatest obstacle.”
Today, the U.S. Small Business Administration (SBA) announced two new initiatives aimed at increasing SBA-backed loans to small businesses in traditionally underserved markets.
“Without question, small businesses drives the success of our economy, creating nearly two-thirds of the new jobs over the last 15 years,” Butterfield said. “Our economic recovery depends on the strength and growth of small businesses.”
Butterfield said the recession has hit small businesses particularly hard, in part, because it has been very difficult for businesses to access capital. Last month, with that in mind, he sponsored a well attended event in Elizabeth City, N.C. aimed at connecting local lenders, SBA and other federal agencies with small business owners in need of capital.
SBA and U.S. Department of Commerce studies have shown the importance of lower-dollar loans to small business formation and growth in underserved communities.
Butterfield said the programs are especially important to the largely rural district he represents where 14 of the 23 counties are designated as Tier 1, or most distressed, in the N.C. Department of Commerce annually ranking of the state's 100 counties based on economic well-being.
Butterfield said the two new loan initiatives – Small Loan Advantage and Community Advantage – are aimed at increasing the number of lower-dollar SBA 7(a) loans going to small businesses and entrepreneurs in underserved communities.
SBA’s most popular loan product, 7(a) government-guaranteed loans, can be used for variety of general business purposes, including working capital and purchases of equipment and real estate.
“Lending to all small businesses continues to be tight, and it has been even tougher in traditionally underserved communities, including among minorities, women and in rural areas,” Butterfield said. “These initiatives are aimed directly at getting more loans into these markets so these small business owners can get the capital they need to start or grow their business and create good paying jobs in local communities across the country.”
The Small Loan Advantage and Community Advantage will both offer a streamlined application process for SBA-guaranteed 7(a) loans up to $250,000. These loans will come with the regular 7(a) government guarantee, 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000.
Small Loan Advantage will be available to the 630 financial institutions across the country in the SBA’s Preferred Lender Program (PLP). Under PLP, which includes most of the agency’s highest volume lenders, SBA delegates the final credit decisions to lenders.
With Community Advantage, SBA will expand the points of access small business owners have for getting loans by opening SBA’s 7(a) loan program to “mission-focused” financial institutions, including Community Development Financial Institutions, Certified Development Companies and non-profit micro lending intermediaries.
Butterfield explained that Community Advantage will leverage the experience these institutions already have in lending to minority, women-owned and start-up companies in economically challenged markets, along with their management and technical assistance expertise, to help make their borrowers successful.
Over the next few weeks, SBA will also be filling seats on its new Advisory Council on Underserved Communities (CUC), which will consist of 20 members from across the country. Members will provide a critical link between SBA and small businesses in traditionally underserved communities. It is anticipated that members will reflect a variety of key sectors, including business owners, banking and finance, community development, nonprofit and academia.