The U.S. Small Business Administration created the 7A Community Advantage loan program as a pilot program to help small businesses in underserved markets. The program was scheduled to expire on September 30, 2022.
LiftFund, RCAC, and DreamSpring are nonprofit organizations that partner with the SBA and the Community Advantage program to fund startups and existing businesses, startup costs, operating expenses, business acquisition, refinancing of business debt, tenant improvements, working capital, equipment purchases, and more.
The program offers loans up to $250,000** with 7-10 year terms (25-year term for real estate) at interest rates based on Prime + 2.75- to 6-percent. Other benefits include:
- Money is available for start-ups and existing businesses
- SBA guarantee allows LiftFund to provide financing
- Complimentary consultation
- No prepayment penalties
- Cash flow must be sufficient for payments
- Owner Injection of 20 percent required for startups and business acquisitions
- Projections are reviewed for businesses affected by COVID19
Apply online at LiftFund, DreamSpring, or RCAC.
**IMPORTANT UPDATE: The SBA announced the following changes to the Community Advantage Loan program: The SBA will:
- Extend the pilot program to September 30, 2024, providing more certainty for the Community Advantage program, which was set to end in September 2022.
- Lift the four-year lender moratorium and enable the SBA to grow this important lender network, opening up a critical capital program to more mission-based lenders across the country.
- Increase the maximum loan size, the new expanded number of lenders will be allowed to access the SBA’s 7(a) government-guaranteed loan program at lending levels up to $350,000, which represents an increase over the current levels of $250,000.
- Remove the restrictions that can keep individuals with criminal backgrounds from accessing the Community Advantage program.
- Simplify underwriting and collateral requirements for borrowers and lenders, including increasing the maximum unsecured loan size from $25,000 to $50,000, removing barriers that disproportionally impact underserved borrowers.
- Introduce additional abilities for lenders to make revolvers and lines of credit, interest-only periods, and other loan modifications that meet borrowers where they are to best serve their capital needs.
- Redefine packaging fee guidelines to better enable CDFIs, CDCs, and mission lenders participating in the Community Advantage program to scale and increase volume to underserved communities.