Citibank and the Small Business Administration are piloting a program to identify creditworthy but underserved small businesses and provide them with SBA loans of up to $250,000.
The program will be tested in markets in and around Washington, Las Vegas, Los Angeles, Miami, and San Francisco.
The guaranty provided by the SBA helps Citibank expand its standard eligibility criteria for small business loans, the bank said.
Dubbed the Capital Access Program, it includes a proprietary technology which targets eligible, high-growth potential businesses in Citibank markets and a credit scoring technique jointly developed by the bank and SBA.
The pilot's credit scoring system is a way to separate loan applicants into three categories: those who can get a Citibank loan without an SBA guaranty, those who can get a loan only with a guaranty, and those who do not meet either standard.
The loans will be guaranteed by the SBA up to 70%. Citibank will make all credit decisions.