Biden-Harris Administration aims to modernize small business program

Effective Aug. 17, Small Business Investment Company (SBIC) program modernization will increase access and diversity funding for the small business, start-up, and investment management communities, the Biden-Harris Administration announced. 

Administrator Isabella Casillas Guzman announced on Wednesday the U.S. Small Business Administration (SBA) finalizing a rule to modernize the SBIC program. The SBIC Investment Diversification and Growth final rule is designed to seed America’s next generation of fund managers and increase funding for underserved and undercapitalized markets. 

“SBIC-licensed funds have seeded and scaled some of the most innovative and successful businesses in the world and helped small businesses sustain operations across the country by helping them bridge capital gaps to build innovative and resilient businesses,” Guzman said in a statement. 

“This final rule will unlock unrealized potential and strengthen, diversify, and expand our network of SBIC licensed private funds to address capital deficiencies in underserved small businesses, startups, and critical U.S. industries impacting our nation’s security.” 

Historically, aspects of the SBIC Program have limited the flow of equity and growth-oriented debt investments from SBIC-licensed funds to small businesses and start-ups operating in underserved communities, capital-intensive industries, and technology areas critical to U.S. national security and economic development. The SBIC Investment Diversification and Growth Rule addresses communities, industries, and technologies not sufficiently financed by private market investors due to lack of access, duration of investment, risk/return profile, or magnitude of capital required. 

Bailey DeVries, associate administrator for Investment and Innovation and acting associate administrator for Capital Access, said public-private SBIC partnerships have advanced the growth of industries by financing start-ups and small businesses important to communities and the national supply chain.

“With the modernization of SBIC regulations, SBA will play an enabling role in partnering with return-seeking private investors to fund businesses in corners of the economy critical to our national security and economic success,” said DeVries.

Biden-Harris Administration announces alliance to support small business exporters

A new agreement aimed at aiding small business exporters was announced Wednesday. 

The signing of the Strategic Alliance Memorandum (SAM) with the International Trade & Forfaiting Association (ITFA) was announced by the U.S. Small Business Administration (SBA). The memorandum will formalize relations with the Trade Association. 

The ITFA and SBA will seek to educate explorers and lenders on financing methods and risk mitigation solutions necessary to facilitate global trade. 

Associate Administrator of SBA’s Office of International Trade Gabriel Esparza said the joint effort seeks to build capacity for exporting through education and technical training for lenders and small businesses and will help leaders in the ITFA and SNA grow support for export finance. 

“By doing so, this partnership helps deliver on the Biden-Harris Administration’s commitment to create opportunities for small businesses and strengthen our economy for all of us,” Esparza said in a statement. 

The new agreement between SBA and ITFA looks to build capacity for exporting through education and technical training for lenders and small businesses. The SBA’s Total Addressable Market Study lists more than $1.3 million small business exporters and a potential export market of 2.6 million. 

The joint agreement formalizes SBA’s relationship with ITFA, a global trade association representing the interests of banks, financial institutions, and service providers involved in trade risk and asset organization and distribution. 

“This milestone joint effort opens doors to immense opportunities, offering greater access to education and global resources for Small and Medium Sized Enterprises (SMEs) in the U.S., which may be unaware of alternatives to better manage their credit risks and satisfy their credit needs with the help of our members from around the world,” ITFA Chairman Sean Edwards said. 

“By leveraging our combined efforts, we are propelling economic growth and creating a thriving ecosystem that benefits both our members and the SMEs they serve. Together, we will forge new paths, unlock fresh avenues of collaboration, and usher in a new perspective for SMEs looking to expand globally.” 

The SBA works to support small and midsized exporters, the goal being to increase the number of businesses exporting and the dollar value of those exports.​ SBA offers access to​ education and technical assistance​, access to capital, and trade policy to support market access for small businesses.

Small, disadvantaged businesses to gain access to increased federal contracting

A new initiative to increase federal contracting with small, disadvantaged businesses was announced Thursday by the Biden-Harris Administration. 

The 8(a) MAS Pool Initiative is a joint effort by the U.S. Small Business Administration (SBA) and U.S. General Services Administration (GSA) to help small, disadvantaged businesses (SDBS) in the 8(a) Business Development Program gain access to additional federal contracts in GSA’s Multiple Award Schedule (MAS) Program. 

By establishing a pool of 8(a) firms, procurement officials will find it easier to locate and contract with SBDs across industries. The joint initiative between the SBA and GSA is aimed at increasing federal contracting opportunities for minority-owned and other small, disadvantaged businesses. 

Participants accepted into the 8(a) MAS Pool will receive a designation indicating to buyers that the business is eligible for awards. Federal agencies can then leverage the size and scale of the MAS marketplace to achieve their contracting goals. 

“We know America’s diverse small business communities provide tremendous value to our government and to taxpayers,” said GSA Administrator Robin Carnahan said in a press release. “We’re excited about this new pool that will make it easier for federal acquisition professionals to find them, buy from them, help them create jobs, and advance agency missions across government.” 

Guided by an executive order advancing racial equity and support for underserved communities, the MAS Pool will seek to create new avenues for minority-owned small businesses to compete in the marketplace. 

The 8(a) Business Development Program provides opportunities for socially and economically disadvantaged participants to develop and grow their businesses, create wealth, and generate jobs in underserved communities. Business development training with SBA’s district teams is part of the program, along with one-on-one counseling, business workshops, and management and technical guidance. 

Underserved small business owners to get boost from new USBA rules

Two rules to address persistent gaps in access to capital impacting small business owners have been finalized by the U.S. Small Business Administration. 

The rules impact small business owners in underserved communities and grant permanence to SBA’s program for nonprofit mission lenders, remove outdated limits on non-depository lender participation, increase opportunities for employee ownership, and modernize the credit criteria and underwriting standards to incentivize a wider distribution network and small-dollar loans. 

SBA Administrator Isabella Casillas Guzman said in a statement that modernizing and expanding SBA’s lending programs will open new opportunities to entrepreneurial but underserved communities that have been denied access to the funding needed to create jobs and grow the economy. 

“Equity has been a top priority of the Biden-Harris Administration since day one as our economy needs all of our great ideas and talented entrepreneurs,” said Guzman. “These rule changes demonstrate that commitment by providing government-guaranteed lenders with all the tools they need to close the gaps that still exist for small businesses who need capital.” 

SBA’s rules will help new entrepreneurs grow their businesses by addressing capital access market gaps in underserved communities and expanding the number of participating SBA lenders.

To increase the number of credit-worthy business owners who can access SBA loans, particularly among underserved communities like women, minority, veteran, and rural entrepreneurs, SBA is modernizing the lending criteria and conditions for its business loan programs and reducing red tape for SBA lenders. SBA is achieving this by updating lending criteria for its 7(a) and 504 loan programs, including by:

  • Allowing lenders to make SBA loan decisions based on their existing credit policies for similarly sized non-SBA loans. 
  • Providing additional flexibility for loans under $150,000 to reduce the cost and complexity of small-dollar lending. 
  • Streamlining paperwork required of lenders, enabling them to spend more time with applicants and make loans more efficiently. 
  • Simplifying and clarifying affiliation standards to ease the burden on small business owners and lenders and make clear who qualifies for an SBA loan.

SBA will expand the number of lenders who can offer SBA-guaranteed loans, providing small businesses with more options for meeting their capital needs. The rule will expand the number of Small Business Lending Company (SBLC) licenses, which promote responsible small business lending through non-depository lenders backed by SBA loan guarantees.

SBA is addressing capital access gaps by granting permanence to SBA’s program for nonprofit, mission-oriented lenders by creating a new Community Advantage SBLC license. Community Advantage lenders have lacked long-term certainty about their participation in SBA programs due to the pilot status of the program.

Despite these limitations, SBA said the Community Advantage Pilot Program has demonstrated success with higher rates of lending to Black, Hispanic, women, and veteran-owned businesses.

SBA’s rule will achieve the following:

  • Lift the moratorium on new regular SBLCs and allow for additional licensees, enabling them to make loans to small-dollar borrowers with government guarantees, reducing risks and broadening opportunities. 
  • Provide certainty through permanence of Community Advantage, encouraging current and new nonprofit lenders to invest in and expand SBA lending operations. 
  • Utilize modern technology to make lender oversight and borrower protection stronger and less resource-intensive than was possible when the SBLC moratorium was put in place.

These rules build upon a previous announcement on the Community Advantage Pilot Program that increased the maximum loan size from $250,000 to $350,000, lifted the four-year lender moratorium, enabled the SBA to expand the lender network, and allowed lenders to offer lines of credit, interest-only periods, and other loan modifications that meet the needs of small business borrowers.

Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, said it’s imperative that entrepreneurs from underserved communities have access to stable and affordable capital to grow and expand their businesses.

“With these new rules, the SBA is taking steps to invest in credit-worthy entrepreneurs and mission-oriented lenders, which will build on the Biden-Harris Administration’s progress to date,” said Kelley.

Veterans, underserved populations to benefit from SBA, VetCert

As part of the Biden-Harris Administration’s commitment to expanding access to resources for veterans and other underserved populations, the U.S. Small Business Administration (SBA) is accepting applications through the Veteran Small Business Certification (VetCert). 

VetCert’s improvements in the customer experience for veteran entrepreneurs and business will expand upon the $25 billion in government contract spending with service-disabled veteran-owned small businesses (SDVOSBs) in Fiscal Year 2021.  

Administrator Isabella Casillas Guzman said in a statement the SBA’s new veteran small business certification program is designed to deliver support skilled entrepreneurs from America’s military community. 

“Supporting these veteran entrepreneurs with access to government contracting,” said Guzman, “will ensure they can continue their valued service to the American people, whether working in manufacturing, retail, R&D, or helping us build critically needed infrastructure to promote America’s long-term growth, job creation, and wealth generation.” 

Denis McDonough, Secretary of Veterans Affairs, cited service to nation as a reason for small businesses owned by veterans being eligible for key benefits. 

The transfer of veteran certification responsibility from the Veterans Administration (VA) to the SBA aligns with the Biden Administration’s focus on stronger interagency collaboration, with the belief that two agencies working together benefits the veteran community and the country.    

The program will be the agency’s primary certification vehicle for all veteran-owned small businesses (VOSBs) and SDVOSBs, important classifications that enable those businesses to qualify for sole-source and set-aside federal contracting awards. Certified VOSBs are eligible to compete for sole-source and set-aside contracts at the Department of Veterans Affairs. Certified SDVOSBs can compete for sole-source and set-aside contracts government-wide. 

As the SBA moves forward to ensure more veteran entrepreneurs have access to economic opportunities,Guzman has granted a one-time, one-year extension to the current veteran small businesses verified by the Veterans AdministrationCenter for Verification and Evaluation (CVE)as of Jan. 1, 2023.   

To streamline the certification experience for veteran entrepreneurs, the SBA is implementing several improvements: 

  • Giving veterans a central support platform for their small business certification needs. 
  • Providing reciprocal certification for businesses with remaining eligibility in the women-owned small business (WOSB) and 8(a) programs. 
  • Creating a more business-friendly approach by streamlining the application process and aligning ownership and control requirements across the VetCert, 8(a), and WOSB programs.  

To be eligible to apply for the Veteran Small Business Certification Program, an applicant must: 

  • Be considered a small business, as defined by the size standard corresponding to any NAICS code listed in the business’s SAM profile. 
  • Have no less than 51% of the business owned and controlled by one or more Veterans. 
  • For certification as a SDVOSB, have no less than 51% of the business owned and controlled by one or more veterans rated as service-disabled by VA. 
  • For those veterans who are permanently and totally disabled and unable to manage the daily business operations of their business, their business may still qualify if their spouse or appointed, permanent caregiver is assisting in that management. 
  • Eligible new applicants certified by the SBA after Jan. 1, 2023, will receive the standard three-year certification period.  

Firms verified by the VA Center for Verification and Evaluation (CVE) as of Jan. 1, 2023, are automatically granted certification by SBA for the remainder of the firm’s eligibility period.

Exton-based firm attains most SBA 504 loans in 2022

Attaining the most SBA 504 loans for small- to mid-sized businesses in the region, Exton-based Seedcopa has been ranked as the leading SBA 504 Lender in Eastern Pennsylvania by the U.S. Small Business Administration for a third straight year. 

Seedcopa has offices in Exton and Wilmington. 

SBA 504 loan structure typically requires a contribution from the business owner of just 10%. A third-party lender, like a bank or credit union, contributes 50% of the project cost. The SBA-backed portion of the loan is 40%. 

Through its flagship SBA 504 loan program, Seedcopa helps businesses obtain government loans at below-market, fixed-interest rates for buying, building, or improving owner-occupied commercial property or to purchase machinery and equipment. 

According to the SBA Eastern PA District Office’s year-end loan volume reports: 

  • Seedcopa supported 46 small business owners in the past fiscal year with SBA 504 loans. 
  • Loans spanned 10 counties: Berks, Bucks, Chester, Delaware, Franklin, Lancaster, Lehigh, Montgomery, Philadelphia, and York. 
  • 37% of businesses assisted were minority owned, women owned, or veteran owned. 
  • The average SBA 504 loan was $896,217. 
  • Total SBA 504 loan projects were $41,226,000. 
  • Total projects were about $4 million higher than in the previous fiscal year. 

The U.S. Small Business Administration announced that in December 2022, the SBA 504 Program reached more than $100 billion in all-time loan fundings. The total impact includes financing from third party lenders and has supported over $250 billion in local economic development across the nation. 

Seedcopa helps businesses attain the financing they need through SBA 504 loan projects to purchase, construct, renovate or expand on new or existing land, as well as to purchase machinery and equipment. SBA 504 is the Small Business Administration’s fixed-rate loan program for small- to mid-sized business owners, and such loans often act as a complement to conventional, commercial loans that Seedcopa facilitates through local banks and credit unions.