Chu: Congress should make program to boost underserved businesses permanent

Rep. Judy Chu (D-Calif.) said at a virtual Axios event Tuesday Congress make permanent the community advantage program that aims to help underserved businesses.

Why it matters: The pandemic hit minority-owned businesses particularly hard. Structural barriers and narrower cash buffers already put them at a disadvantage prior to the coronavirus.

How it works: Under the community advantage program, the Small Business Administration (SBA) guarantees up to 85% of the loan if it's under $150,000 and up to 75% if it's over that amount.

• Lenders are not allowed to charge more than the prime interest rate plus 6%.

What she's saying: The community advantage pilot program was started to boost underserved businesses that might otherwise be turned away from SBA lending, Chu said.

• "It allowed for more risk-taking by the lenders for these particular businesses, which include people of color," she noted.
• "So what I want to do is to make the community advantage program permanent so more financial institutions will include this in their bank of options for credit-giving."
• The pilot program is set to expire in 2022.

Watch the event here.