SBA Information Notice: CA SBLC requests for increases in 7(a) loan size or geographic lending territory
Summary
SBA Information Notice, Control No. 5000-860909, effective December 17, 2024, to SBA employees and 7(a) Community Advantage Small Business Lending Companies (CA SBLCs). It announces that SBA's Office of Credit Risk Management is starting a process to enable qualifying CA SBLCs to make 7(a) loans of up to $500,000. Qualifying CA SBLCs may also apply to SBA to expand their 7(a) geographic lending territory.
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SBA Information Notice
TO: All SBA Employees and 7(a) Community CONTROL NO.: 5000-860909
Advantage Small Business Lending Companies
EFFECTIVE: December 17, 2024
SUBJECT: CA SBLC requests for increases in 7(a)
loan size or geographic lending territory
The purpose of this Notice is to announce that SBA’s Office of Credit Risk Management (OCRM)
is initiating a process to enable qualifying Community Advantage Small Business Lending
Companies (CA SBLCs) to: (1) make 7(a) loans of up to $500,000, and (2) to apply to SBA for
expansion of their 7(a) loan lending territory.
On April 12, 2023, SBA published a final rule at 88 FR 21890 on Small Business Lending
Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan
Authorization. Through that rule, SBA created a new type of SBLC called a CA SBLC and
provided for a grandfathering of CA Pilot Lenders that were participating in the CA Pilot
Program (in accordance with 13 C.F.R. § 120.420(e)) to be licensed as CA SBLCs.
SBA Information Notice 5000-846918, effective May 1, 2023, states that SBA would be holding
all CA SBLCs to the same requirements that had existed for the CA Pilot Program, as outlined in
the Community Advantage Participant Guide (Version 7, effective May 31, 2022), except for the
loan loss requirement and the fidelity insurance requirement.
SBA set the maximum aggregate loan amount available for CA Pilot Lenders at $350,000 (gross),
and that limit remained in place when these Lenders transitioned to CA SBLCs. CA SBLCs are
7(a) Lenders making 7(a) loans and are subject to the Loan Program Requirements stated in statute,
regulation, and Standard Operating Procedures (SOPs) 50 56.1, 50 10 7.1, and 50 57.3. The CA
Pilot Program has been sunset, and the CA Pilot Program Guide has been retired.
Expansion of 7(a) loan ceiling for CA SBLCs:
Loan ceilings up to $500,000 (no action required by CA SBLC):
Effective on or after January 1, 2025, SBA will increase the CA SBLC loan maximum up to
$500,000 for all Active Lenders with Satisfactory SBA Performance that are in Good Standing
as determined by the SBA in their sole discretion. No action is required on the CA SBLC’s part.
OCRM will contact qualifying CA SBLCs directly to confirm the increased loan ceiling. CA
PAGE 1 of 3 EXPIRES: 12/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
SBLCs may not begin making loans greater than $350,000 until receiving confirmation of the
higher ceiling from OCRM.
• Active Lenders are those CA SBLCs that have received at least four 7(a) loan or
Community Advantage loan approvals in the past two years.
• Satisfactory SBA Performance is defined in 13 CFR § 120.410(a)(2) and states that a
Lender must have a continuing ability to evaluate, process, close, disburse, service,
liquidate and litigate small business loans including, but not limited to… (2) maintaining
satisfactory SBA performance, as determined by SBA in its sole discretion. The 7(a)
Lender’s Risk Rating, among other factors, will be considered in determining satisfactory
SBA performance. Other factors may include, but are not limited to, review/examination
assessments, historical performance measures (like default rate, purchase rate and loss
rate), loan volume to the extent that it impacts performance measures, and other
performance related measurements and information (such as contribution toward SBA’s
mission).
• Good Standing is defined in 13 CFR § 120.420. In part, the definition states a Lender is
in Good Standing with SBA if it is in compliance with all applicable laws and
regulations, policies, and procedures, is in good financial condition as determined by
SBA, and is not under investigation or indictment for, or has not been convicted of, or
had a judgment entered against it for felony or fraud.
Expansion of 7(a) geographic lending areas for CA SBLCs:
SBA permits CA SBLCs to lend only in state(s) and territory(s) specified in the lender’s business
plan approved when admitted to the program by SBA and in those state(s) and territory(s)
subsequently approved by OCRM. SBA is allowing CA SBLCs that are Active Lenders with
Satisfactory Performance and in Good Standing (each as defined above and as determined by
SBA in its sole discretion) to apply to the Agency for the authority to expand the geographic
areas in which they are authorized to make 7(a) loans.
Application process for increased geographic lending areas:
Beginning January 1, 2025, CA SBLCs may apply to SBA requesting authority to make 7(a)
loans outside of their current SBA-approved lending territory. Send applications to
CAloans@sba.gov.
The CA SBLC’s application must include:
1. A listing of new additional states where CA SBLC is seeking authorization to make 7(a)
loan.
2. Copy of Board Resolution authorizing the CA SBLC’s proposed new territory.
3. Board-approved Business Plan addressing the CA SBLC’s proposed operations for
lending in this new dollar range or in this new geographic area. The business plan must
include the following information:
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
a. The CA SBLC must provide a narrative addressing the underserved or unmet
demand for financial services in the proposed new territories or in the new loan
size. The narrative should address how expanded lending will contribute to local
economic development, job creation, and improved living standards and what
support is available from local communities, businesses, and governments
indicating a need for expanded lending services.
b. The CA SBLC’s strategy for entering new markets and support its preparedness to
scale operations, including staffing, technology infrastructure, and physical
locations. The board-approved business plan should address the CA SBLC’s
staffing in the new lending territories, how loan applications will be sourced in
these expanded markets, who will conduct site visits if it is determined that a site
visit is appropriate, and whether or not the lender has different legal resources in
the expanded lending territory.
c. How the CA SBLC will ensure that the expansion will not negatively affect its
existing operations and customer service levels. Are there potential synergies
between existing and new operations, enhancing overall efficiency and service
quality?
4. Most recent quarterly or annual financial statement if not already supplied to SBA for
reporting requirements pursuant to 13 CFR §120.464.
5. Capital Plan: The CA SBLC’s board is required to determine the CA SBLC’s capital
adequacy goals – that is the total amount of capital needed to assure the CA SBLC’s
continued financial viability and to provide for any necessary growth. The Board of
Directors must establish, adopt, and maintain a formal written Capital Plan pursuant to 13
CFR §120.462(c). The plan must include any interim capital targets that are necessary to
achieve the CA SBLC’s capital adequacy goals. Lender must maintain minimum capital
amount as published in Loan Program Requirements. The Capital Plan must address the
following: (i) management capability; (ii) quality of operating policies, procedures, and
internal controls; iii) quality and quantity of earnings; iv) asset quality and the adequacy
of the allowance for loan losses within the loan portfolio; v) sufficiency of liquidity; and
vi) any other risk-oriented activities or conditions that warrant additional capital (e.g.,
portfolio growth rate).
Questions: Questions concerning this Notice may be directed to Nermeen Ghniem, Senior
Financial Analyst, Office of Credit Risk Management at CAloans@sba.gov.
Susan Streich, Director
Office of Credit Risk Management
PAGE 3 of 3 EXPIRES: 12/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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