SBA Community Advantage Loans: What You Need to Know

Updated on January 28, 2020
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Getting small business loans today can feel a little bit like living in the Wild West. Startup businesses or those in “risky” industries often find themselves ineligible for bank financing—and foraging through the frontier of online lenders can be daunting. Business owners have to wade through unclear terms and high interest rates without much help.

Have you found yourself in a similar situation? Consider your financing options through the Small Business Administration’s Community Advantage loan program.

What Is an SBA Community Advantage Loan?  

An SBA Community Advantage loan is a small business term loan of $50,000 to $250,000. It’s a federally guaranteed loan generally administered by community-based lenders. As a result, Community Advantage loans are affordable—with interest rates typically ranging 7% to 9%—and have long maturities—usually 7 to 10 years.

In 2011, the SBA committed to improving access to capital by giving funds to organizations with a history of helping underserved communities. These organizations consist of Community Development Financial Institutions, SBA-authorized Microloan Intermediaries, and Certified Development Companies. The SBA has now approved over 100 Community Advantage lenders since then—meaning that more businesses across the country can take advantage of these affordable loans. And for those historically underserved communities, it means more businesses up and running and more jobs created.  

Which Businesses Are Eligible for SBA Community Advantage Loans?

You must be a for-profit business to qualify for a Community Advantage loan. You must also be a small business: the SBA defines a small business as one that has fewer than 500 employees and total assets less than $15 million. Both established businesses and startup businesses are eligible, but the SBA’s requirements differ for each.

Since SBA Community Advantage is a government-sponsored loan program, there are some industries that are ineligible—including adult entertainment, religious organizations, or political activities. For a full list of ineligible industries, visit the SBA’s website.

How to Qualify for an SBA Community Advantage Loan

Credit History

All lenders start by looking at your credit. But since Community Advantage lenders are mission-based, most are more flexible with your credit than traditional lenders tend to be.

For example, nonprofit lender Accion’s personal credit score requirements start as low as 575.  Community Advantage lenders also look at your past and anticipated personal income during the term of the loan—they’ll want to see that you can make the proposed Community Advantage loan payment along with your personal living expenses.


Lenders will look to whether you have the experience to own and operate the business. They’ll ask questions about your background or look for proof that you’ve got relevant experience in the industry and know your market.

For example, are you looking to open up a restaurant? Proving your experience working in restaurants and having a background in culinary arts will strengthen your loan application.

Vision for the Future

Community Advantage lenders will want to see that you have a forward-looking vision for the business and that your plans are well thought-out.

Do you have two years’ worth of sales, expense, and profitability projections? The lender will want to see that these projections are reasonable and feel confident that you can execute on them. If you’re a startup business, lenders will want to see your business plan. With SBA loans, the guarantee on the loan lets many lenders look at reasonable financial projections and decrease their dependence on collateral versus what conventional bank loans require.

Is the Community Advantage Loan Right for Your Business?

It’s always discouraging to hear a “no” on your loan application. If you’ve been turned down by a bank when applying for a loan of $50,000 to $250,000, you should consider applying for an SBA Community Advantage loan. When a lender has been designated by the SBA as a Community Advantage lender, it means that lender has demonstrated flexibility in their lending criteria in accordance with the SBA’s guidelines.     

A Community Advantage loan is ideal for many small businesses because of its seven- to 10-year loan maturity and affordable loan interest rate.

The use of Community Advantage loan proceeds is also flexible. As Tom Adams of Deadly Sins Brewing noted, “I needed a loan for working capital, which was nearly impossible to find. Accion was able to provide me the $95,000 loan which has allowed me to buy equipment and renovate the space for my brewery.”

Community Advantage loans are often one of the few affordable financing options for new food and beverage businesses. Many banks consider food and beverage to be a risky industry category, and it’s not an unfounded notion—restaurants frequently don’t make a profit until 2 years in operation. Importantly, most food and beverage storefronts don’t own their own real estate.  Since real estate typically comprises the largest portion of loan collateral for bank commercial loans, the lack of real estate collateral can frequently keep many food and beverage businesses from obtaining a bank loan.  As a result, new food and beverage owners might find the Community Advantage loan an affordable financing alternative.

What Do You Need to Apply?

Just like with most small business loans, applying for an SBA Community Advantage loan requires your 3-3-1’s.

That is, your most recent three years of personal tax returns, your most recent three years of business tax returns (if available), and your SBA-approved Personal Financial Statement (SBA Form 413) that lists your personal assets and liabilities, as well as additional key information.

If you are a startup business, you’ll need to provide a business plan with two years’ worth of financial projections and proof of your equity injection (or down payment) into your business. Most lenders need proof that you will have an equity injection of 10% to 20% or more, at the lender’s discretion.

Finally, SBA Community Advantage loans are government-guaranteed loans.  As a result, the SBA will require that you have never defaulted on any federal loans, including defaults on federally-insured student loans and federally-backed mortgages like FHA and VA SBA loans. Your name will be checked against a federal database, so it’s good to be upfront with the lender in the beginning.

How Long Does It Take to Be Approved?

Community Advantage loans tend to take longer to underwrite and close than smaller microloans and more expensive internet loans do, because Community Advantage loans are underwritten by the lender and then approved by the SBA.

After the Community Advantage lender decides to move forward with a loan request, it might take another 30 days or so to finish final underwriting, SBA approval, and closing of a Community Advantage loan. Many factors can influence the loan closing time, but being prepared and responsive to the lender’s requests for information will definitely shorten your wait.

How to Find Community Advantage Lenders

There are now over 100 approved SBA Community Advantage lenders across the country. Some are more regional in focus, like Wisconsin Women’s Business Initiative Corporation or Mountain West Small Business Finance, while others cover multiple geographies, like Accion. For a full list of Community Advantage-approved lenders, visit the SBA’s websiteOnce you’ve found a Community Advantage Lender, you can start putting together your SBA loan application. Good luck!

Lauren Yothers

Lauren Yothers is the Marketing Manager for Accion East, a member of the Accion U.S. Network. Accion is an SBA Microloan Intermediary and approved Community Advantage Lender in CT, FL, GA, MA, NH, NJ, NY, and RI. To apply for a loan with Accion, visit
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