Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.) introduced two bills to empower entrepreneurs in underserved communities.

The Closing the Credit Gap Act would make the Small Business Administration’s (SBA) 7(a) Community Advantage Pilot Program (CA) permanent, providing stability and certainty for existing lenders and attracting new lenders focused on underserved markets. In addition to codifying the requirement that Community Advantage lenders make at least 60 percent of their loans to borrowers in underserved markets, the bill expands the geographic and demographic reach of SBA loans by broadening the categories of businesses that are able to receive CA loans to include women and business owners who are socially and economically disadvantaged, regardless of business location.

The Unlocking Opportunities in Emerging Markets Act would establish an Office of Emerging Markets (OEM) within SBA’s Office of Capital Access to ensure that SBA’s access to capital initiatives address the specific needs of entrepreneurs in underserved domestic emerging markets in a coordinated way.

“Capital is the lifeblood of small businesses and for too many minority, women and veteran entrepreneurs, the inability to access capital is what prevents them from pursuing their dreams and ideas,” said Cardin. “With these two bills, we will build on the Community Advantage program’s demonstrated ability to get capital into the hands of underserved entrepreneurs, and we will empower a senior level official to oversee Community Advantage and other targeted efforts. Together, these bills will open up opportunities for entrepreneurs in underserved communities, so they can pursue their dreams, build successful companies, create jobs and ensure SBA is coordinating and meeting the objectives of its diversity initiatives.”

Traditional 7(a) loans provide entrepreneurs with up to $5 million in capital at reasonable rates when they are unable to get credit elsewhere, but the program does not have a strong record of reaching underserved communities. In fiscal 2018, when comparing the two programs, Black business owners received only 4.5 percent of SBA 7(a) loans while receiving 12 percent of CA loans; and Hispanic business owners received 8.5 percent of 7(a) loans compared to 17 percent of CA loans.

Similarly, women entrepreneurs received 18 percent of all 7(a) loans approved, but received 30 percent of all loans in the CA program; and veteran business owners received 4 percent of SBA 7(a) loans compared to 10 percent of CA loans.