Leveraging the use of a Lender Service Provider
SBA Lenders: you’re drowning in the world of PPP Lending.
On top of that, many of you are also impacted by SBA Servicing Actions on your 7a loans and some of your PPP Loans. It’s a lot to deal with.
We don’t currently have direct loan servicing guidance on PPP Loans, but SBA has indicated that – for now, anyway – you’re to service them in the same manner as your 7a loans.
Fine. Okay. You can do that. But you’re overwhelmed by issues arising from PPP Lending and the impact of COVID on your staff. What can you do?
PAUSE. BREATHE.
Nothing good comes from a rash decision or a leap into action without thought and preparation. Servicing Actions for your SBA loans only differ from your commercial practices because of SBA deadlines, required actions and approvals. For the most part, prudent lending still drives the bus.
And Servicing Actions are a great opportunity to connect with a Borrower whom you may not speak with often. You may be able to mitigate an issue in the file you didn’t even realize you had – and you might even make a sale of a new product. These are just two reasons why it’s so important to slow down and run through your processes methodically (but always timely).
Here’s a few first steps to consider.
1. Make sure to document the file with a request from the Borrower in writing, as
required by SBA.
2. Determine if the file has had a post-closing or recent annual review identifying issues
you need to mitigate now.
3. Obtain the appropriate supporting documentation for your decision.
4. Collect consideration from the Borrower (such as paydown, documentation, waiving of
defenses, just to name a few) in return for granting their request.
Are you thinking, “Really?! That doesn’t free up my time to make it happen, and it doesn’t magically produce staffing to get the job done.”
You’re right, of course. Many Lenders struggle with this. And that’s where outsourcing this part of your process can be a great benefit.
There’s an old saying: “Work smarter, not harder.” Many Lenders outsource pieces of their SBA process to a third party, with great results. You may already be outsourcing PPP Lending to a third-party platform. So why not outsource Servicing Actions as well?
A third party can help you stay on top of this with confidence that the SBA requirements are being met and the proper analysis is being performed. Think about the time you could save if you outsourced:
1. File reviews to determine if there are issues requiring mitigation.
2. Needs list generation for loan officers and relationship managers to provide to the
client to obtain items required to complete the analysis.
3. Performance of the analysis and preparation of the Servicing Action Memo.
4. Needs lists for documenting and closing the Servicing Action to SBA standards.
Here at LRM Lender Consultants, we help you get through the stress and overwhelm these requirements can bring. Whether permanently being a part of your solution or helping bridge the gap while you’re dealing with staffing or other challenges, we’re here to ease the stress and assist in finding the right solution for your situation. Schedule a Free Consultation today to discuss your needs!