The U.S. Small Business Administration (SBA) has authorized four new Small Business Lending Companies (SBLCs) to expand access to its 7(a) loan program, a critical financing tool for small businesses. The move, announced December 23 by SBA Administrator Isabel Casillas Guzman, marks the second expansion of the SBLC program in 40 years, increasing the number of SBLCs from 14 to 20.
The newly licensed institutions—Cooperative Business Services (CBS), A10 Capital, Lafayette Square, and Stonehenge Capital—are tasked with delivering capital to underserved communities across the country. These organizations will use their new licenses to provide government-backed loans to entrepreneurs in low-income and rural areas.
Expanding the Lending Network
SBLC licenses enable non-depository lenders to participate in the SBA’s 7(a) loan program, which reduces risks for lenders by offering government guarantees and helps lower costs for borrowers. The SBA’s decision to issue new licenses reflects a broader effort to address longstanding barriers to capital for small businesses in historically underserved markets.
Each of the four new SBLCs brings a unique focus to the program:
- Cooperative Business Services (CBS): Operating out of Cincinnati, Ohio, CBS is a Credit Union Service Organization with a 21-year track record of funding small businesses. To date, the organization has facilitated over $400 million in loans to women-owned businesses and $123 million to veteran-owned enterprises. With its new license, CBS plans to increase lending activity in low- and moderate-income communities through its network of credit unions.
- A10 Capital: Based in Boise, Idaho, A10 Capital has extensive experience in commercial real estate financing and pandemic-era lending programs. As an SBLC, A10 intends to target women, veterans, rural entrepreneurs, and minority business owners. The company also plans to focus on sustainability and renewable energy projects, with at least half of its loans earmarked for underserved markets.
- Lafayette Square: This minority-owned investment platform, founded in 2020, focuses on lending to businesses that substantially employ low-to-moderate-income individuals. Lafayette Square plans to expand into areas such as solar energy, recycling, and next-generation technologies. Its operations will support small businesses nationwide, with an emphasis on rural and economically disadvantaged areas.
- Stonehenge Capital: A Baton Rouge-based company with a 25-year history in community development finance, Stonehenge has invested in underserved markets across 38 states. The organization plans to allocate 65% of its loan volume to low-income communities and 25-40% to green initiatives. Stonehenge’s lending activities will continue to focus on areas often overlooked by traditional financial institutions.
The SBA’s latest expansion is expected to boost lending in areas where small business owners have struggled to access affordable financing. The 7(a) program is widely regarded as a lifeline for small businesses, providing funding for operations, expansion, and long-term growth.
“Cooperative Business Services, LLC, is honored to receive an SBA SBLC license, a pivotal milestone that reinforces our commitment to serving communities through our innovative credit union consortium. By partnering with local credit unions, we can expand access to vital capital for underserved markets, empowering entrepreneurs to start, operate, and grow businesses that drive economic growth and strengthen the fabric of our communities,” said Keith Reed, President and CEO of CBS.
This article, “SBA Expands Access to Small Business Loans in Underserved Communities” was first published on Small Business Trends