Puzzles and Dominos and SBA Lending!

Oh, my!

If you’ve followed us for any length of time, or if you’ve had the pleasure (!) of being a client, you know we love SBA Lending. In fact, you may know that we happily and proudly call ourselves SBA Geeks. We truly enjoy helping our bank clients meet the needs of the small businesses in their community – the businesses that are the backbone of our country’s economy.

There are many moving parts that go into creating and maintaining a solid, strategically dependable SBA program. And that’s why we focus on laying the foundation and providing the tools – the systems, processes, procedures, and checklists – that create SBA success and reinforce SBA compliance.

To help make this clearer, we often talk about jigsaw puzzles and dominos.

Now, obviously, SBA lending isn’t a game (though it can sometimes be a puzzle). So what do we mean by this?

Anyone who’s ever put a jigsaw puzzle together knows you start with the border – the outline, the framework for what you’re creating, so you can begin to see the developing picture.

And that’s essentially what the SBA SOP 50 10 in effect at loan origination provides. As the rulebook for SBA eligibility, and SBA compliance, it’s the puzzle border, the loan framework, defining the boundaries and making sure everything fits inside.

Then the loan details – collateral, rate, term, character, credit elsewhere, and so on – are the pieces that create the final picture for eligibility.

So what about those dominos?

Those are the unexpected surprises. You know them, right? Probably all too well. 

Maybe it’s a simple change in structure – perhaps a last-minute decision to form a new company for a real-estate deal. Or the Borrower buys equipment before closing without telling you, changing the anticipated use of proceeds. Even a mailing-address change after closing can be that first domino.

And you know what we mean: this isn’t a friendly game of dominos. It’s one of those complex patterns of dominos, all lined up in a row – that’s your beautifully-structured loan package – and then that first domino tips over and they all cascade down. 

But here’s the catch: this doesn’t have to be a bad thing. Because if your process is set up correctly, that domino cascade means the unexpected change follows through to every required adjustment: documentation, approvals, eligibility analysis, closing, servicing updates, and so on.

Now, if you’ve ever set up a domino cascade, you know how easy it is to have one domino out of alignment that stops the whole thing in its tracks. Frustrating, though not a disaster.

But if you have one step in your SBA packaging or servicing process that’s out of alignment, that could put your SBA guaranty at risk due to an SBA compliance issue. And that’s way past merely frustrating.

This is where LRM’s SBA Lender consulting services can help. We work with your SBA team to validate your processes, bring your teams up to speed with new SBA SOPs, and generally help strengthen your SBA compliance – all so your SBA loan puzzle is a thing of beauty and your dominos cascade perfectly.

Give us a call at 877-576-0819, or contact us through this link to schedule a consultation. We’re here to help remove the frustration of missing puzzle pieces and out-of-line dominos!