What Bank Executives Should Understand About SBA Lending

Let’s start here: SBA lending is not “small commercial lending with extra paperwork.”

Instead, it’s strategic risk management guided by the SBA SOP.

Why?

To start with, the government guaranty fundamentally changes risk exposure.

And then there’s the community aspect: SBA loans allow banks to safely serve small-business Borrowers that might not qualify for a standard commercial loan. This helps stabilize not only the local business community, but also the bank’s overall credit risk exposure.

It’s not about the rate

Well, of course the rate is always important. 

But SBA Borrowers are more interested in knowing they’ll be able to close on their financing. And they appreciate the clarity provided by SBA policies. Yes, we know those policies change – but the fundamental guidelines of SBA lending provide a framework that Borrowers can rely upon. Even people unfamiliar with the ins and outs of SBA lending understand its basic principles.

When SBA Lending departments don’t explain the process and timeline, or when the internal handoffs between sales and SBA underwriting are fumbled, Borrowers are disappointed and deals fall through.

It’s up to bank executives to ensure smooth functioning of their SBA teams. Operational discipline is key to maintaining SBA compliance.

Speaking of discipline…

Some banks view SBA teams as non-strategic or back-office. But as we said in our latest article on mergers , when SBA Lending is viewed as a specialized discipline, it’s unquestionably strategic.

Staying on top of SBA SOPs and their updates, actively managing SBA review issues, and structuring solid deals – this keeps your SBA team fully compliant.

And as an SBA Lender service provider, we can confirm that SBA Compliance is unforgiving – and that your reputation as a Lender is vital. SBA reviews are retrospective, and too many errors will trigger repair or denial of the guaranty. Furthermore, SBA is more aware of your bank’s patterns over time than you might expect – and the SBA Lending community is like any small community: word spreads. You don’t want the secondary market looking at you sideways, and you definitely don’t want SBA to lose confidence in your bank.

SBA success requires executive sponsorship.

The best SBA programs have one key thing in common: visible, informed, consistent support from bank executives who understand what SBA is all about, who listen to their SBA teams, and who invest in ongoing training and effective systems, and SBA compliance practices that hold up over time.

How we help

If you’re a bank executive new to SBA Lending, or you want to make sure your SBA team is fully up to speed – that’s where we come in. We’re SBA geeks and proud of it! We’ll work with your team to review policies and practices, conduct SBA loan reviews – and we can provide SBA Lender training to ensure your team is fully up to speed with all the most recent SBA SOP and Notices.

Give us a call at 877-576-0819, or contact us through this link. We’re ready to help.