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business owners in underserved communities and grant permanence to SBA’s program for nonprofit mission lenders, remove outdated limits on non-depository lender participation, increase opportunities for employee ownership, and modernize the credit criteria and underwriting standards to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.

M&T Bank to host Multicultural Small Business Lab

M&T Bank is seeking as many as 50 entrepreneurs to take part in its second annual Capital Region Multicultural Small Business Lab – a free program designed to provide multicultural business owners with the guidance and skills needed to build strong businesses, spur economic growth in the Harrisburg area and build generational wealth.

The seven-week program, in partnership with the Center for Innovation & Entrepreneurship at Harrisburg University of Science and Technology, will focus on business planning, establishing credit, accessing capital, marketing, branding and networking.

The Multicultural Small Business Lab starts May 10 at Harrisburg University, with courses held weekly Wednesday evenings. It will conclude June 21 with a pitch competition and opportunity to win M&T-funded grants totaling $12,000 – $6,000 for first place, $4,000 for second place and $2,000 for third place.

Entrepreneurs interested in participating must complete an online application no later than April 18 and meet the following eligibility requirements:

· Black/African American, Hispanic/Latinx or Asian American;

· In business no more than three years;

· Annual business revenue of $350,000 or less;

· Reside in the Greater Harrisburg area.

Qualified applicants will be enrolled in the program on a first-come, first-served basis.

Entrepreneurs who participated in the Capital Region Multicultural Small Business Lab in 2022 are eligible to enroll this year, if they did not receive a prize award during last year’s program.

“The Multicultural Small Business Lab provides local entrepreneurs with the guidance and resources necessary to pursue opportunities benefitting their surrounding communities,” Nora Habig, M&T Bank’s regional president for Central and Western Pennsylvania, said in a release. “This year’s program marks the second year of our partnership with the Center for Innovation & Entrepreneurship to offer the Capital Region’s small-business owners a program and grant opportunities to propel their businesses to the next level.”

In its first year, 2022, the program provided 40 minority small-business owners with free access to resources and education to grow their business.

Paula Wolf is a freelance writer

Pennsylvania Catalyst Loan Fund aimed at aiding small businesses

The Capital Region Economic Development Corporation (CREDC) has announced its participation with five other economic development organizations in securing $20 million through the State’s Small Business Credit Initiative, named “The Pennsylvania Catalyst Loan Fund.” 

Should the state meet utilization requirements, funding will be available to lend through three tranches. The requirements include loaning 5.7% of the funds to qualified “Very Small Businesses” of 10 or less workers and 31.29% to SEDI (Socially and Economically Disadvantaged Individuals) Borrowers. 

Open for application is the first tranche of approximately $6 million for all participating economic development organizations. Of that tranche, $1.2 million is reserved for qualifying small businesses in CREDC’s service area of Cumberland, Dauphin, and Perry Counties. If all three tranches can be accessed, a total of $4 million will be reserved for lending in these three counties. 

A small business must meet the following requirements to be eligible to apply for the Pennsylvania Catalyst Loan: 

  • Be a for-profit business. 
  • Demonstrate a need for credit. 
  • Meet the definition of a small business according to the SBA size standards.
  • Operate in Pennsylvania. 

Funds can be used to support various sorts of business, including the following: 

  • Fixed Assets 
  • Inventory & Supplies 
  • Soft Costs 
  • Wages 
  • Working Capital 

Every dollar loaned by the Pennsylvania Catalyst Fund must be matched by at least one dollar from a private credit source. CREDC and partnering economic development organizations are working to identify private lending sources interested in supporting the program and small businesses. 

The State’s Small Business Credit Initiative comes from the American Rescue Plan Act (ARPA) of 2021. ARPA included provisions to establish loan funds to help small businesses recover and rebuild in response to the impact of COVID-19. 

Dawood Engineering founder joins bank’s effort to expand in the Capital Region

Bony Dawood, president and CEO of Dawood Engineering in Harrisburg, has been added to the Board of Directors for PB Bankshares, Inc., the holding company for Presence Bank, to help Presence Bank better tailor its services to midstate businesses and small business owners in general. PHOTO/IOANNIS PASHAKIS
Bony Dawood, president and CEO of Dawood Engineering in Harrisburg, has been added to the Board of Directors for PB Bankshares, Inc., the holding company for Presence Bank. PHOTO/IOANNIS PASHAKIS

A Chester County-based bank has enlisted the help of a Harrisburg business owner as its loaning arm reaches out to more midstate business owners.

Presence Bank said it is partnering with influential business leaders to assist in the bank’s expansion to the Capital Region in an effort that it says will help it better the lives of the people who choose to bank with them.

The Coatsville bank recently announced that it will be adding president and CEO of Dawood Engineering, Bony Dawood, to its Board of Directors. Dawood will sit on the board for PB Bankshares, Inc., the holding company for Presence Bank.

Dawood founded Dawood Engineering in 1992 and during that time, has been actively involved in various levels of the community, from collaborating with fellow business owners to sitting on boards and interacting with municipal leaders.

“As a small business owner, the benefits of working in a community bank and that relationship was very important in those years,” Dawood said. “[I have been] involved in a lot of projects that have impacted Central Pennsylvania communities [and] really had a pretty active role in creating a lot of jobs in Central PA for many years, and enjoyed that aspect of it.”

When Dawood was approached about the opportunity to join the board of PB Bankshares, Inc., he was intrigued by the opportunity to come alongside fledgling entrepreneurs from the perspective of a lender.

“I’ve been in the business world for years, and I’ve worked with a lot of lenders in the marketplace, and it really gives me a different understanding [and] different perspective.”

Dawood was an integral part of the design-build team for the West Shore Hospital, which was completed/opened in 2014. The company was responsible for surveying, civil engineering, and site design, including geotechnical engineering, wetlands delineation, and a traffic impact study. PHOTO/PROVIDED

Having been an entrepreneur owner that experienced the challenges of growing a business, Dawood says he understands the common struggles business owners face including cash flow, the fundamentals of building a business and navigating how they will make payroll. With this perspective in mind, he says he views community banks as being a fundamental part of entrepreneur welfare.

“Having a lender really work with them through that is really important,” Dawood said. “We know a lot of businesses, and we know a lot of people that want to start businesses. Having lenders that understand the challenges [is] where the community banks come.”

Presence Bank was founded in 1919. The state-chartered FDIC bank has approximately $300 million in assets.

The bank currently has an office in Lancaster County and loan production offices in Lancaster and Dauphin Counties.

Dawood’s inclusion to the board is expected to help Presence Bank better tailor its services to midstate businesses and small business owners in general. It also comes at a time of growth for the company.

President and CEO of Presence Bank, Janak Amin, believed Dawood was a natural fit for the bank’s board. Amin said he perceived Dawood as a professional with strong ethics, a family-oriented posture, and as being a person of faith—all of which are qualities that Presence Bank prioritizes when recruiting new members.

“We look at people who are obviously well regarded in their local community,” Amin said, asserting how Dawood personified the skills his team was searching for when considering how to solidify Presence Bank’s brand in the Capital Region.

Amin applauded Dawood’s business acumen and extensive experience in corporate governance through his history of building a company in the heavily-regulated engineering industry. For Amin, the regulatory experience will be a welcome asset as the board navigates regulations that also accompany the financial industry.

Thomas Bream, market executive for Presence Bank’s Capital Region emphasized Presence Bank’s current initiative to invest resources into the region, specifically in the form of collaborating with leaders who can assist in the success of the expansion effort.

With Dawood’s experience and community influence in the Capital Region, Bream said that it made sense for Presence Bank to leverage Dawood’s skills and network to help increase the brand’s reputation as it moves into the Capital Region.

“We were looking for people with [business] experience [and] someone that had visibility in this community,” Bream said.

For Bream, Dawood will not only bring experience and positive qualities of leadership to the board room, but will also be able to offer wisdom and advice on what he is seeing play out in the region’s marketplace as a business owner.

Dawood believes it is important for business owners to leverage their influence for the good of the communities they work within.

“Business owners to some degree [become] role models, and people watch them very closely in terms of their actions. I think it’s very important for business owners to take ownership and provide strong leadership,” Dawood said.

Dawood has held seats on a number of boards over the years including on the Harrisburg Regional Chamber of Commerce, the American Council of Engineering Consultants, and holding a Governor appointed position on the Pennsylvania Department of Labor and Industry Industrial Board.

In addition to his involvement with PB Bankshares Inc., Dawood currently serves as director of Milton S. Hershey Medical Center’s Quality Committee, senior advisory member of Asian Indian Americans of Central Pennsylvania and board member of the American Islamic Cultural Center.

Dawood sees board involvement as a responsibility that requires a high degree of focus and engagement. In recent years, Dawood has limited the number of boards he participates in, so he is able to fully engage and dedicate adequate time to offer a valuable contribution to the organizations he partners with.

“As owners, we have to set a tone in terms of how it is to be a good citizen. There’s no right or wrong way, it’s a message being sent, but it starts from the top and you have to let the employees know how important it is.”

Like Presence Bank, Dawood Engineering pays close attention to the culture that is fostered within the organization. Dawood is deliberate in developing a strong employee culture and prioritizing positive community impact.

“The culture of the company is [that] we try to do the right thing,” Dawood said. “We’ve tried to understand what the needs are and be part of it and create careers for individuals and also provide a benefit to the community that we’re working in.”