SBA Sees Record Year for Community Advantage Lending
October 18, 2017
Tammy Halevy, Senior Vice President, New Initiatives, AEO
The Association for Enterprise Opportunity (AEO) would like to congratulate William (Bill) Manger, Manny Hidalgo and the entire team at the U.S. Small Business Administration’s (SBA) Office of Economic Opportunity for a record year of Community Advantage lending. In FY 2017, 69 Community Advantage lenders originated 1,043 loans with an aggregate value of $138,039,560 and an average loan size of $132,349. This represents a 6 percent increase in volume and an 11 percent increase in value compared to the prior fiscal year.
Launched as a pilot in order to meet the credit, management and technical assistance needs of small businesses in underserved markets, the Community Advantage program permits non-profit financial intermediaries with a focus on economic development to access 7(a) loan guarantees for small business loans in amounts up to $250,000.
The SBA’s goals for the program are to:
• Increase access to credit for small businesses located in underserved areas
• Expand distribution channels (and hence access) to the SBA 7(a) loan program by allowing non-traditional, mission-oriented lenders to participate
• Provide Management and Technical Assistance (M&TA) to small businesses as needed
• Manage portfolio risk
We are proud that so many AEO and TILT Forward Network members participate in the Community Advantage program, including CDC Small Business Finance in California and PeopleFund, who were the highest volume originators, with 127 and 91 loans originated respectively.
It’s also worth noting that in FY 2017:
• More than half (54 percent) of the Community Advantage loans were originated by the top 10 participating lenders.
• Four Community Advantage lenders (6 percent) originated more than an average of one loan each week, while 27 (39 percent) originated fewer than five loans.
• Forty-one percent of the lenders that participated in both FY 2016 and FY 2017 increased their origination volume year over year. For these lenders, the median increase in origination volume was 51 percent for those that made at least five loans.
The Community Advantage program represents a potentially game-changing opportunity to increase access to credit for underserved entrepreneurs, and we are excited about its continued growth and success. For more information on the SBA’s Community Advantage program, click here.