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C-Suite Wednesday — Industry Says Cut SBA Regional Offices, No Change to Lender Oversight

March 8, 2017

By Bob Coleman
Editor, C-Suite Wednesday

C-Suite Wednesday — Industry Says Cut SBA Regional Offices, No Change to Lender Oversight

Our readers are small business lending professionals in the public and private sectors. Thanks to the 88 of you responded to our poll.

Regarding the 10 regional SBA offices:

Close ‘em — 59%
Keep them open as they are an important part of fulfilling SBA’s mission — 26%
Keep them open, but cut staff — 15%

Regarding Lender Oversight:

SBA’s lender oversight is fine as is — 55%
SBA must decrease lender oversight activity — 32%
SBA must increase lender oversight activity — 14%

The $28.5 billion funding level for 7(a) is:

Just Right — 49%
Too Much — 16%
Not Enough — 35%

The $7.5 billion funding level for 504 is:

Just Right — 45%
Too Much — 10%
Not Enough — 45%

Quotes for attribution

OIG and SBA monitor and scrutinize enough and do not need to increase that at all. They need to become more understanding of human error during audits and when evaluating a guaranty concern. Small errors should NOT be used as a way to void it.
Steve Mariani Diamond Financial Services

SBA needs to increase loan limits for borrowers. I am sure there are many areas other than Denver where costs are rising at a very rapid rate. SBA lending limits are not keeping up with the market.
Andrew Spaulding

Regional Offices Comments

Use the funds that would be needed for regional directors that are figureheads to better staff the SBA offices that work with lenders on closing loans. Figure out a way to better staff Colson services. Way too many errors coming out of those offices that we (the banks) have to fix to correct their errors.

With regards to regional offices, I think the important thing is the LRS positions. Most of the emphasis needs to go there and lender training. I’m not clear how important the regional director positions are. Perhaps that could be added to a district director’s job?

We have not reached out to the regional staff in the last 3-4 years

Close all regional offices immediately.

SBA Resources

SBA should decrease its overwhelming number of political appointees while increasing number of employees working in the field.

RE: SBA 504 program. Sacramento Loan Processing Center appears to need more experience staffing.

SBA has been guilty of grade creep. Pay levels in both regional and district offices are too high compared to the responsibilities of their staffs. Reducing the GS pay grid 10% across the board might fix this.

Place more resources and training in the hands of the state and city offices. Add more seasoned loan officers to the loan processing centers.

Program Recommendations

Crack down on predatory 7a OOCRE lending – that should be focused more to the 504 relm

Self-Funding programs need less rather than more Government

Rewrite SOP 5057 to streamline servicing and liquidation of $150K and under loans Emphasize material deficiencies in lender oversight FIX the loan info system especially CPC and SIMPLIFY repetitive tab systems

Lender Oversight Comments

Lender oversight needs to be adjusted, but in as much as they are going to address the way the OIG nitpicks the lenders in certain situations. No one expects the OIG to turn a blind eye to blatant disregard, but in certain circumstances, guarantees are called into question on a technicality that had nothing to do with the demise of a business.

Should monitor SBA 7a’s more as many SBA 504’s that ran into eligibility items, banks just go PLP and get them done that way..they need the same oversight that 504 have.

Finally

And get out of Disaster Relief loans

Do not need Deputy District Directors either!

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