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The Small Business Administration is clamping down on its Community Advantage loan program, barring new lenders and raising capital reserve requirements for existing ones, Inc. reports.
Designed to expand access to credit for underserved entrepreneurs—including minority-, women- and veteran-owned businesses—the program has recently shown signs of strain, with a 7% default rate over the past year.
The changes come amid broader efforts by the current administration to scale back Biden-era small business lending policies. SBA Administrator Kelly Loeffler criticized the previous administration for allegedly favoring certain groups and taking excessive risk with taxpayer-backed capital. Notably, organizations like the Progress Fund and the Black Business Investment Fund were singled out, prompting pushback from affected lenders.
Initially launched in 2011 as a pilot, the program saw dramatic expansion under the Biden administration, with loan volume increasing 40% year over year by 2024. But the tightened oversight signals a new direction—one that could make it harder for high-risk borrowers to access capital as the SBA retools its approach to lending and risk management.
