WASHINGTON — Small businesses have a new source of financing backed by the U.S. Small Business Administration (SBA). The administration has funded 20 community organizations to enable them to start making loans up to $200,000 to qualifying small businesses.
Authorized under the Small Business Jobs Act of 2010, the new Intermediary Lending Pilot Program (ILP) will provide direct loans up to $1 million to 20 community organizations or intermediaries in fiscal year 2011, which in turn will use those funds to help finance small businesses, mostly in underserved markets.
Designed to expand access to capital to small businesses and drive economic growth and job creation, the program will fund 20 additional community lenders in fiscal year 2012. The program has an additional year of authority after that, subject to appropriation by the U.S. Congress.
“The Intermediary Lending Program is an important new tool to support businesses in underserved markets,” says SBA Deputy Administrator Marie Johns. “Partnering with community lenders will increase points of access to capital for startups and businesses that have been disproportionately affected by the recession.”
One goal of the pilot program over the next two to three years is to assess the intermediary model as an effective tool for increasing lower-dollar lending to small businesses and startups, particularly those in traditionally underserved communities.