Cardin Introduces Legislation to Codify SBA's Community Advantage Pilot Program

Press Release

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.

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