Washington, D.C. –Senator Ben Cardin (D-Md.), Chairman of the U.S. Senate Committee on Small Business & Entrepreneurship, today introduced legislation to improve on and make permanent the Small Business Administration’s (SBA) Community Advantage (CA) pilot program.

“The Community Advantage pilot program has proven to be an effective tool in reaching traditionally underserved entrepreneurs.” Cardin said. “Minority and women-owned businesses are the fastest-growing groups of firms in the U.S, yet they are 2 to 3 times more likely to be denied loans than nonminority business owners. The CA program helps close this credit gap, and I am proud to introduce legislation to codify the program and address this inequity for hardworking entrepreneurs.”

Congresswoman Judy Chu (CA-27) introduced the companion bill in the House.

"Business loans have been critical in helping small businesses get back on their feet as they recover from the COVID-19 pandemic. Yet, minority-, woman-owned, and other underserved small businesses often lack the relationships with large banks needed to access these loans," said Rep. Chu. "The SBA's Community Advantage program has an extensive track record of helping these underserved firms secure loans and will play a critical role in ensuring that no small business is left behind in our economic recovery. I am proud to partner with Senator Cardin on this legislation and I hope we can get it passed to help more of our small businesses thrive."

Senator Cardin is a longtime advocate of the CA pilot program, and introduced legislation to make the pilot program permanent in 2019, 2020, and 2021. The Biden Administration is also a supporter of the program, and in March 2021, extended it an additional 2 years from September 2022 to 2024, among other changes including opening the program up to justice impacted entrepreneurs.

SBA’s capital access programs, including the flagship 7(a) program, provide capital to small business owners who otherwise would not be able to access it elsewhere. The traditional 7(a) program provides entrepreneurs with up to $5 million in capital at reasonable rates, but unfortunately has struggled to reach underserved entrepreneurs.

In an effort to close this credit gap in underserved markets, the Obama Administration first created the Community Advantage Pilot Program in 2011. The CA program opens the 7(a) program to mission-oriented nonprofit lenders such as Community Development Financial Institutions (CDFIs) to make 7(a) loans of up to $350,000. Mission based lenders have a proven track record of reaching underserved communities; Black business owners receive 23% of CA funding compared to 4% of traditional 7(a) loans, and Hispanic business owners receive 13% of CA loans compared to 10% of 7(a) loans. Today, there are 110 lenders participating in the CA program, who made 661 loans totaling $104 million in FY2022.

This legislation is endorsed by the Mission Lenders Working Group, the National Association of Development Companies, the National Association of Government Guaranteed Lenders, the Association of Entreprise Opportunity, and Small Business Majority.

“As one of the first mission lenders to be certified as a Community Advantage lender, I am pleased to see Senator Ben Cardin and Congresswoman Judy Chu introduce the Community Advantage Loan Program Permanency Act of 2022,” said Robert Villarreal, Chief of External Affairs at CDC Small Business Finance, and member of the Mission Lenders Working Group Steering Committee. “This critical bill will allow CDC Small Business Finance and our mission lender colleagues across the country to partner with the U.S. Small Business Administration to ensure that underbanked small businesses get the financing and support they need. Since becoming a CA lender, CDC Small Business has disbursed millions of dollars in CA loans to businesses across the country from Pasadena, California, all the way to Bowie, Maryland. We look forward to continuing our work in the lending community.”

"As small business is a critical driver of the vibrancy of our nation's local communities and economy, NADCO supports the Community Advantage Loan Program Permanency Act of 2022,” said NADCO President and CEO, Rhonda Pointon. “We applaud Congress prioritizing small businesses that often face significant challenges attaining conventional financing and providing access to capital via SBA lending programs that support their growth and success.” 

“The time has come to make permanent the successful Community Advantage program, a vital part of the 7(a) loan program dedicated to mission-lending to underserved markets. Borrowers and lenders need the assurance that the core program for helping those most in need will be available for the long term,” said NAGGL President and CEO, Tony Wilkinson. “The lending community is grateful to Senator Cardin and Representative Chu for their dedicated leadership to make this pilot program a permanent fixture in SBA lending. NAGGL fully endorses the Community Advantage Loan Program Permanency Act of 2022, and urges swift Congressional action.”

“The Community Advantage Loan Program has been critical in connecting access to small-dollar loans to LMI and underserved communities. AEO has long recognized that communities of color continuously face barriers to capital access at disproportionate rates and recognizes the Community Advantage Loan Program to be a vehicle for parity in small-dollar lending. However, the program has not been codified in statute, despite the great strides it has made in providing affordable loans to underserved communities. We therefore excitedly endorse the Community Advantage Loan Program Permanency Act of 2022 and look forward to working alongside Congress, the Small Business Administration and our members to bolster the program and improve further it in the years to come,” said Connie E. Evans, President and CEO of the Association for Enterprise Opportunity.

Click here to view a PDF of the bill text.