• Rebecca Mendoza

Jigsaw puzzles, dominos, and SBA lending – oh my!



Anyone who knows us here at LRM knows we love SBA lending. We love helping our clients meet the needs of the small businesses that fuel our country’s economy.


We’re all about laying the foundation and providing the tools to build successful SBA programs. And to do that, we often talk about dominos and jigsaw puzzles.


Some of you are chuckling, either because you’ve heard us say it in a training, or because you’ve been doing SBA lending long enough to know exactly what we mean.


SBA is neither a game nor a puzzle, but both jigsaw-puzzle-assembly and domino-playing include skills and tasks needed to do SBA lending successfully. Here’s how.


At origination, take a step back and look at the program. Your guide is the SBA SOP 50 10 in effect at the time the loan originates. It’s the Golden Rule Book for all SBA eligibility – your puzzle border, so to speak, those beautiful edge pieces that help you put boundaries around the picture.


The loan details are the other puzzle pieces: collateral, rate, term, character, credit elsewhere, leases, environmental reports, and so on. With patience and those boundary-defining edge pieces, the puzzle gradually comes together. And finally, if the loan is eligible, you get to the closing – eligibility being the dreaded missing puzzle piece!


A simple change in structure (such as a last-minute borrower decision to form a new Company to purchase RE), use of proceeds (such as the borrower purchasing equipment before closing without notifying you), or mailing address (the loan closed, but then they fill out a change of address form) can be that first domino.


But this isn’t the traditional game of dominos. It’s that tumbling-dominos game you loved to play as a kid. You know, the one where you line the dominos up on their short ends, spaced just far enough apart, and then tip over the first one and watch them all cascade into each other.


Your processes and procedures line up perfectly, so when there’s one simple change in loan conditions, the events that transpire cascade until you’ve dealt with every detail the change requires. But if one step of your process or procedure is missed, the cascade won’t go to the end of the line, and your guaranty could be in jeopardy.


Most people enjoy puzzles and domino-cascades, but not everyone enjoys the challenges of SBA lending. You don’t have to, but the job still needs to be done correctly to protect the guaranty and please the customer. LRM can work with your staff on enhancing processes and procedures and provide the training to ensure the puzzle is complete and the dominos cascade perfectly. Schedule a consultation today to discuss your program and how we can help!