On May 1, 2023, SBA issued Information Notice 5000-846918, Community Advantage Small Business Lending Company Conversion (effective May 1, 2023). The notice announces that effective May 12, 2023, the Office of Credit Risk Management (OCRM) “is initiating a program to enable current Community Advantage Pilot Program Lenders (CA Pilot Lenders) to become Community Advantage Small Business Lending Companies (CA SBLCs)”. The notice begins implementation of the part of the final rule on Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization (88 FR 21890) that lifts the moratorium on licensing new SBLCs and creates a new category of SBLCS – CA SBLCs.
Except for the changes specifically cited in the notice, the new CA SBLCs will follow current CA Pilot Program requirements as outlined in the Community Advantage Participant Guide. This includes having authority to make loans of $350,000 and less and adhering to the requirement that at least 60% of the number of CA loans closed by the lender meet the underserved market requirements currently in place for the CA Pilot Program. But the notice indicates that SBA will provide further guidance on SBA Loan Program Requirements for CA SBLCs through additional SBA policy notices and/or SOPs.
Finally the notice announces that SBA intends to sunset the CA Pilot Program on September 30, 2023 and that all current CA Pilot lenders must execute an SBA Form 750, Guaranty Agreement (Deferred Participation) by that date in order to continue to have the authority to make 7(a) loans (as CA SBLCs) after the CA Pilot Program sunsets. CA lenders should look for an email from SBA providing an unexecuted Form 750 and additional information regarding the conversion. [Please refer to the notice for full details.]
