Getting loans to those who need them

As regional administrator for the four-state area of Region 7 of the U.S. Small Business Administration, it's my job - and the job of the agency - to try to help as many small-business owners and entrepreneurs as possible access the capital they need to start or grow their business.

We know we've made gains in expanding our programs, but there still is more to do to make sure SBA loans are available to every business owner who needs one to start or grow a business. Underserved communities in particular still have trouble accessing the capital they need to achieve their dreams.

When Administrator Maria Contreras-Sweet started on the job in April, she made clear that improving access to capital for the underserved would be a top priority. That's why we're pleased to announce that we are transforming our guarantee process to serve America's small businesses - and the entrepreneurs behind them - better.

In an effort to simplify our loan application process, we're streamlining our underwriting by making available our total credit scoring model to all our lending partners for loans of $350,000 or less. These changes will go into effect this month.

The SBA total credit score combines an entrepreneur's personal and business credit scores and makes it easier and less time-intensive for banks to do business with the SBA. This model ensures that risk characteristics - not socio-economic factors - determine who is deemed creditworthy.

Along with this simplification, we're eliminating requirements for time-consuming analyses of a company's cash flow on loans under $350,000.

These steps are in addition to a change we made at the beginning of this fiscal year, when we eliminated fees on loans of $150,000 or less, in order to reduce the costs for lenders of making small-dollar loans.

Why does this matter? Because many times, the smaller or newer the business, the smaller the loan that is needed. As these businesses grow, they will come back for additional loans, creating jobs along the way. So encouraging lenders to make more small-dollar loans is good for the economy, it's good for businesses and it's good for our communities.

These changes make sense. They are another step in our efforts to modernize our lending process and bring it up to pace with the high-tech era we live in. They will make it easier and less time-intensive for banks to do business with the SBA.

We're making these changes knowing they will simplify and streamline the lending process, which will offer incentives to banks to make more small-dollar loans in order to get more loans into the hands of traditionally underserved entrepreneurs.

' Patricia Brown-Dixon is Region 7 administrator of the U.S. Small Business Administration. Contact: patricia.brown-dixon@sba.gov