Chu Gathers Small Business Borrowers and Lenders to Examine SBA Community Advantage Program
Washington, May 21, 2019
Washington, D.C.— Today, Rep. Judy Chu (D-CA) Chairwoman of the Small Business Subcommittee on Investigations, Oversight, & Regulations convened a panel of small business lenders and borrowers to discuss the state of the Small Business Administration’s (SBA) Community Lending Program, including whether to move the program towards permanency.
“On this Committee, we are focused on making sure that small businesses, whether in my district in California, in Ranking Member Spano’s district in Florida, and in every district across America, can access the capital they need to start a business, grow, and create new jobs,” said Rep. Chu. “And we know that when capital is affordable and accessible on reasonable terms, small businesses can do what they do best: strengthen our communities and fuel our economy.”
The Community Advantage 7(a) loan program (CA) came into being in 2011 with the goal of providing credit, management, and technical assistant to underserved communities. For the past 8 years, CA has provided mission-oriented lenders, primarily nonprofit financial intermediaries focused on economic development, access to 7(a) loan guaranties for loans of $250,000 or less. According to the SBA, the CA program reaches significantly more women and minorities than the traditional 7(a) loan program. The program has been extended numerous times and is currently set to expire in 2022. Today’s hearing gave Members the chance to hear directly from lenders and borrowers about their experiences with the program and recommendations for its future.
“I am a strong advocate for the SBA loan program,” said Angela Bicos Mavridis, CEO and Founder of TRIBALÍ Foods in San Marino, CA, in Rep. Chu’s district. “There are thousands of fledgling business owners who this program was designed for and who would otherwise have limited options to start and grow their businesses, hire staff and enhance their communities. My own journey would be markedly different without the program. Without these loans, our success thus far could not have been possible.“
“Of the $300 million dollars disbursed, 10% of our lending is through the community advantage pilot program,” said Janie Barrera, President and CEO of Liftfund in San Antonio, TX. “There is no way we could have served an additional 260 entrepreneurs $33.5 million without the community advantage program.”
“We need to try harder as CA lenders, we need to try more as an industry and we need to advance our Community Advantage lending and really try and do more ‘Investing in Community,’” said Jason Kropf, Executive Director of Growth Capital in Cleveland, Ohio. “We need to try to recognize the importance of financing underserved small business concerns, the inherent risk involved in financing underserved businesses, and the capacity of experienced mission oriented lenders to manage risk and build sustainable, bankable businesses through our SBA Community Advantage program that I am confident this committee will support.”
“The impact of the program has been significant in a very short time frame and the results have been impressive,” said Robert Villarreal, Executive Vice President of CDC Small Business Finance in San Diego, CA. “The program is serving the Target Market (or emerging markets); the CA program places the borrower in position to obtain financing from another source, such as a traditional bank; and business growth through the CA program has far-reaching impacts on borrowers and their communities.”
“SBA’s loan programs, including the 7(a) program, are designed to reach borrowers who cannot affordably and reasonably access credit from a conventional lender. The Community Advantage takes that one important step further by reaching borrowers that even the general 7(a) program does not reach,” said Rep. Chu. “This program reaches significantly more women and minorities than the general 7(a) program, and as we heard today, it is also making a serious impact in our nation’s rural communities. Ensuring this program will be available to future generations of entrepreneurs from underserved communities is a top priority of mine on this Committee.”