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The Small Business Administration is expanding its loan programs to support investments in clean energy and climate-friendly businesses.
The SBA announced on July 22 that it is increasing the maximum loan available through its Community Advantage program — which provides financing to entrepreneurs in underserved markets, like low-income communities — with increased flexibility for climate-focused projects.
The SBA will increase the maximum loan amount for active lenders to $500,000 from $350,000. It is also creating an application process for lenders to expand their loan size up to $2 million for climate-focused projects or $1 million for general projects.
Lastly, the SBA will create an application for Community Advantage lenders to expand their geographic reach.
The changes are part of the SBA's green lender initiative, which aims to enroll more climate-focused lenders in SBA programs and raise capital to support sustainable businesses.
Isabel Guzman, the administrator of the SBA, said in a statement that the green lender initiative aims to support "mission-driven climate lenders" and help fund "the small business clean energy transition."
"Small businesses and homes account for more than one-third of US emissions, so it is vital that they are part of the solution," Guzman said.
SBA loans, provided through banks or other financial institutions, help entrepreneurs raise capital.
The SBA offers three main types of loans:
Community Advantage — the program being expanded by the green lender initiative — is a segment of the 7(a) loan program.
"SBA loans have been assisting small businesses and the lenders who support them for decades," Katie Frost, associate administrator for the SBA Office of Capital Access — which helps businesses find lenders — said in a statement. "The SBA is excited to welcome green banks and similar institutions into SBA lending, to capitalize on these benefits and broaden their support to more American small businesses."
The expansion of the SBA's loan programs comes after several years of record entrepreneurship. Under the Biden administration, there have been 18 million small business applications. Additionally, in past years, the SBA has revised its loan requirements to expand outreach to underserved communities.
The SBA's focus on climate-friendly businesses is part of the Biden administration's green energy goals, which include a carbon pollution-free power sector by 2035 and a zero-emission economy by 2050.
The 2022 Inflation Reduction Act — the largest climate-focused federal package in US history — approved spending on green energy projects, including authorizing the $27 billion Greenhouse Gas Reduction Fund through the Environmental Protection Agency.
The green lender initiative will help small businesses tap into this fund, according to the SBA.
"The green lending initiative will help advance EPA's and SBA's shared goals of ensuring that communities and small businesses have access to the capital they need to support and benefit from a cleaner and more sustainable economy," Michael S. Regan, EPA administrator, said in a statement.
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