On August 1, 2023, the U.S. Small Business Administration (SBA) began implementing additional policies aimed at expanding access to capital for small businesses, especially underserved entrepreneurs, via SBA’s signature 7(a) and 504 Loan Programs.
These changes are designed to streamline the loan review and approval process to make it easier for lenders to participate in SBA lending programs by reducing paperwork and reporting requirements for smaller-dollar loans.
Changes include the following:
- SOP 50 10 7: Lender and Development Company Loan Programs: Contains SBA’s policies and procedures governing the 7(a) and 504 loan programs.
- SOP 50 56: Lender participation requirements: Contains the criteria for becoming an SBA Lender.
- SOP 50 57: 7(a) Loan Servicing and Liquidation: Contains the policies and procedures for 7(a) loan servicing and liquidation.
The SBA will begin accepting is the Universal Purchase Package (UPP), which will streamline the process for lenders to request SBA honor its loan guaranty.
Credit unions across the country currently have $3.15 billion in Small Business Administration loans outstanding, with an average loan representing $388,000 in local community investment. These newly implemented federal rules should make it easier for more credit unions, including smaller credit unions, to participate in SBA guaranty programs, in addition to removing restrictions on non-depository CDFI participation, and will help direct capital to a greater number of minority and women-owned businesses.
Please find more information and the updated lending policies here in the full announcement.
Read Inclusiv’s recent recommendations to SBA regarding the 7(a) Loan Program here.