The U.S. Small Business Administration and Consumer Financial Protection Bureau each issued new rules earlier this year that aim to expand funding access for small-business owners, especially those in underserved communities.
Additional nonbank SBA lenders Small business lending companies, or SBLCs, are nonbank institutions — such as financial technology companies and alternative lenders — that are authorized to fund SBA loans. SBLC licenses have been limited to 14 since the early 1980s, but the SBA has now added three additional licenses.
This could mean additional risks for small-business owners if predatory lenders are able to provide unfair or expensive loan products under the emblem of the SBA, says Joshua Miller, vice president of research and policy at Accion Opportunity Fund, a nonprofit community development financial institution based in California.
The SBA will also issue a new type of license called the Community Advantage SBLC to participants in the pilot Community Advantage program, as well as new nonprofit organizations. These licenses will represent a permanent continuation of the CA program, which has backed nondepository, mission-based lenders that target underserved communities, and that was previously set to expire in September.Updated lending criteria In addition to issuing new licenses, the SBA also updated its lending criteria.