According to WSJ.com, on Tuesday, the Small Business Administration will announce the federal government is streamlining some of the key requirements banks use to grant SBA-backed loans. The move is intended to help more blacks and other minorities borrow funds for their business ventures. In January, The Wall Street Journal reported that black business owners received just 2.3% of the roughly 54,000 loans made by the SBA in fiscal 2013, down from 11% in 2008.
Beginning July 1, lenders will no longer have to perform an analysis of cash flow or debt service coverage on loans of $350,000 or less, provided business owners meet the agency’s credit standards. Eliminating the two requirements is expected to cut the time needed to originate a small-dollar loan by as much as 50%, SBA officials say.
The changes “will simplify and streamline the lending process, which will incentivize banks to do more small-dollar loans in order to get more loans into the hands of traditionally underserved entrepreneurs,” SBA administrator Maria Contreras-Sweet said in a statement.
In another effort to simplify SBA lending and increase the number of lenders participating in the program, the agency will early next year introduce a new electronic platform for originating and closing government-backed loans that will include a web-based tool laying out SBA rules, a process for submitting electronic signatures and online document storage. Under the current system, SBA lenders must turn to a 321-page manual for program guidelines.
(Continue reading on WSJ.com: “Federal Government to Streamline Key SBA Loan Requirements“)