SBA Announces New Loan Fund for Small Businesses

Enacted last year, the Small Business Jobs Act of 2010 established an “Intermediary Lending Pilot Program” to provide direct loans to non-profit intermediaries for the purpose of making loans to small business.  This pilot program will terminate after three years.  Under this pilot, loans of as high as $1 million will be made to 20 organizations in 2011, and these organizations are required to use this money to make small business loans of as high as $200,000 in mostly underserved markets.

This program is intended to provide assistance to:

• Areas having limited availability of commercial loans of $200,000 or less;


• Borrowers with declining collateral values or lower credit scores due to the economic downturn;


• Commercial lenders with less funding available for loans and lower appetites for risk leading to tighter underwriting standards; or


• Other underserved groups.

Considering the current state of small business lending, it would seem that most areas of the country should qualify as having “limited availability of commercial loans of $200,000 or less.”

While this Intermediary Lending Pilot Program can offer some relief for a handful of small businesses, it is extremely limited in scope and certainly does not address the wide-spread credit problems that have persisted for a number of years now.   Even so, small businesses having credit needs should review this program.

Small business lending has fallen consistently since 2008.   During this period, CompTIA has continued to advocate for increased access to capital for small tech companies, however, this credit problem has not been forcefully addressed.  Clearly, the federal government could play a valuable role in providing this much-needed access to capital.  Now more than ever, small businesses need much more assistance than provided by this very limited pilot program operated by intermediaries.  CompTIA will continue to urge lawmakers to address this need.