July 16, 2015
By Bob Coleman
Editor, Coleman Report
I only got eight votes on my lender survey about the proposed Immediate Disaster Assistance Programs, which right there speaks volumes about the tremendous industry lack of enthusiasm. (By contrast, 247 weighed in on the poll about 100% SBA 7(a) financing.)
The proposed program would allow lenders to loan up to $25,000 in a 36-hour turnaround period using a simple credit scoring model — and get an 85% guaranty.
The results aren’t positive — all eight lenders said they wouldn’t touch the program as is.
- SBA has a long history of hanging lenders out to dry on these special program as huge losses mount later.
- SBA needs to hire more staff.
- Simplicity. Clearly define eligibility so there will be no “Monday morning quarterbacking” when it comes time to collect on the guaranty.
There is a silver lining. Four of the eight say they would participate if they were confident SBA would honor the guaranty.
For all the good will, and good works, this program would generate to Main Street for both SBA, and the lender, after a disaster, hopefully developing some simple regs for lenders to follow will occur.