SBA issues 3 new lending licenses

Security cameras are on a light pole outside the Jacob K. Javits Federal Building in New York in this March 30, 2017 file photo. Federal agencies with offices in the building are the FBI, the Department of Homeland Security, the General Services Administration, Housing and Urban Development, Small Business Administration, and the U.S. Citizenship and Immigration Services. (AP/Mark Lennihan)
Security cameras are on a light pole outside the Jacob K. Javits Federal Building in New York in this March 30, 2017 file photo. Federal agencies with offices in the building are the FBI, the Department of Homeland Security, the General Services Administration, Housing and Urban Development, Small Business Administration, and the U.S. Citizenship and Immigration Services. (AP/Mark Lennihan)

The U.S. Small Business Administration has granted three new Small Business Lending Company licences for the first time in four decades -- including one to an Arkansas nonprofit institution.

Arkansas Capital Corporation, along with Alaska Growth Capital and Funding Circle, based in Denver, all received the licenses, according to a release Wednesday. All three lenders focus on historically underserved markets including small businesses in Native, rural, and low-income communities.

The Small Business Lending Company license extends governmental guarantees to lenders when they're loaning money to small businesses -- reducing risk to the lender.

The move is the first expansion of the Small Business Administration's program in over 40 years. The addition of the three new institutions brings the total number of licensees to 17.

The administration opened an application process for the new licenses in June. A spokesman from SBA said the number of applicants was not being released but said there was strong interest and the decision making process was competitive.

"The Biden-Harris Administration remains committed to filling capital market gaps -- and the expansion of the SBA's SBLC program after more than forty years is a monumental step forward in this crucial effort," SBA Administrator Isabel Guzman said in a statement. "With the addition of three new Small Business License Companies, the SBA will be able to serve even more small business owners who need capital to start, operate, and grow their businesses."

Arkansas Capital is designated as a community development finance institution. Operating through its subsidiaries and affiliates, Arkansas Capital supports entrepreneurial education and development in disadvantaged areas in Arkansas and surrounding states.

The Small Business Lending Company licence allows Arkansas Capital to expand lending services through the SBA's 7(a) program outside of Arkansas, Craig Calafati, executive vice president at Arkansas Capital, said in a Wednesday interview.

"This allows us operate nationwide," he said.

Calafati said plans are to focus at first on Arkansas neighboring states -- Mississippi, Tennessee, Oklahoma, Louisiana, Missouri and Texas -- before pushing further afield.

Since its start in 1957 by Arkansas financial heavyweights such as Winthrop Rockefeller, Witt Stephens and John Tyson, Arkansas Capital has loaned more than $2.34 billion in capital to small businesses and economic development projects.

Since 2019, more than half of Arkansas Capital Corporation's lending has been in counties designated as "persistent poverty counties" -- areas that have suffered 20% poverty for more than 30 years. Forty percent of all persistent poverty counties nationwide are found in the states bordering Arkansas, according to Arkansas Capital.

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