BLOG: SBA 7(a) Loans — Advantage Loans

With the implementation of two new loan initiatives -- Small Loan Advantage and Community Advantage -- the Community Express program ended on April 30, 2011. See SBA's Dec. 15, 2010 press release for more information.

SBA is committed to expanding access to capital for small businesses and entrepreneurs in underserved communities, so that they can help drive economic growth and job creation.  SBA and U.S. Department of Commerce have conducted studies that show the importance of lower dollar loans to small business formation and growth in underserved communities.  The need to encourage lenders to provide an increased number of lower-dollar loans to small business is evident.

One of the initiatives SBA rolled out aimed at increasing the number of lower-dollar loans in the underserved communities is called the Small Loan Advantage Program.  This initiative allows lenders to get a pre-qualification indication from SBA that the applicant business has sufficient creditworthiness to warrant giving the applicant full consideration for financing.  With that in mind, and building on the agency’s successful “Advantage” platform, both offer a streamlined application process for SBA 7(a) loans up to $250,000 for Community Advantage and $350,000 for Small Loan Advantage.

How it Works

The loan provided to the business is the equivalent of a Basic 7(a) Loan — not revolving — allowing the proceeds to be used for regular purposes. What differentiates a Basic 7(a) Advantage Loan from a Basic 7(a) loan is which lenders can get a guarantee. Another difference is the amount of underwriting some lenders must conduct before providing a guarantee. The principal difference is tied to the lender who provides the loan, rather than the structure and purpose of the loan itself. The Advantage Programs allows selected lenders to obtain 7(a) guarantees on loans they propose to provide to eligible and creditworthy small businesses that meet all the requirements of a Basic 7(a) Loan through an alternative application process.  Here are some of the key facts and the process for applying:

• The small business applicant applies for financial assistance from an SBA approved lender.

• The lender decides if the request will require an SBA guaranty.

• To help the lender decide creditworthiness for lower-dollar loans, the lender can obtain certain data from the applicant and then get a pre-qualification indication from SBA as to the acceptability of the applicant for a loan guarantee.

• If the pre-qualification comes back positive, the lender may complete a streamlined credit memo and make a formal request to SBA for guarantee.

• Advantage Loans are structured to encourage existing SBA lenders to make lower-dollar loans, which often benefit businesses in underserved markets.

Details of the Small Loan Advantage

Maximum Loan Size: $350,000

Guarantee: 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000

Approval Times: Most Small Loan Advantage loans will be approved in a matter of minutes through electronic submission (e-Tran). Non-delegated Small Loan Advantage loans will be approved within 5 to 10 days.

Paperwork: Small Loan Advantage features a two-page application for borrowers after the lender has decided to apply for an SBA guaranty for the proposed loan. The lender completes a credit memo and may use its own loan note.

Lender Requirements: Small Loan Advantage is open to all financial institutions with an executed loan guaranty agreement with the SBA (currently over 7,500 lenders across the nation).

SLA Credit Score: The SLA credit score is calculated based on a combination of consumer credit bureau data, business bureau data, borrower financials, and application data. It is an origination score. (The SLA credit score is not to be confused with the Small Business Predictive Score (SBPS) used by SBA’s Office of Credit Risk Management, which is a management score.) The minimum SLA credit score is based on the lower end of the risk profile of the current SBA portfolio and may be adjusted up or down from time to time. The minimum credit score required for the application to be processed as an SLA application is 140.  If it falls below this credit score, the application may be submitted under our other loan programs.

Details of the Community Advantage

Community Advantage

Maximum Loan Size: $250,000

Guarantee: 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000.

Approval Times: Most Community Advantage loans will be approved within 5 to 10 days.

Paperwork: Community Advantage features streamlined paperwork, with a two-page application for borrowers.

Lender Requirements: Community Advantage is open to mission-focused lenders, including community development financial institutions, SBA’s certified development companies, and SBA’s nonprofit microlending intermediaries. Community Advantage lenders will be expected to maintain at least 60 percent of their SBA loan portfolio in underserved markets.

Community Advantage Approved Lenders List

Community Advantage Participant Guide

Rural Lender Advantage

Another loan available under the Advantage Loan initiative is the Small/Rural Lender Advantage (S/RLA).  This program is designed to accommodate the unique loan processing needs of small community/rural-based lenders by simplifying and streamlining loan application process and procedures, particularly for smaller SBA loans. It is part of a broader SBA initiative to promote the economic development of local communities, particularly those facing the challenges of population loss, economic dislocation, and high unemployment.

If you are interested in finding out more about the Rural Lender Advantage loan, visit

To Learn More

For more information, contact your local SBA District Office.


Virginia SBDC