June 10, 2014
By Bob Coleman
Editor, Coleman Report
Underwriting for Small Lender Advantage loans will be replaced with SBA’s predictive scorning model.
“The time has come to reach out to all of our lending partners on small loans and bring new lenders into the SBA fold. To augment loan volume and multiply points of sale, I’m pleased to announce that we’re transforming into a smart system guarantee process to serve businesses better.
“Our Office of Capital Access has been testing and refining a predictive business credit scoring model for more than a decade, combining an entrepreneur’s personal and business credit scores. SBA’s total credit score will make it easier and less time-intensive for banks to do business with the SBA. This model is cost-reducing and credit-based. It ensures that risk characteristics – not socio-economic factors – determine who is deemed creditworthy.
“We’re now so confident of our model’s predictive value on small loans that we’re eliminating cumbersome analyses of a company’s cash flow, a step that can delay loan decisions.
“Effective next month, I’m directing that SBA’s total credit scoring model be made available to all our lending partners for loans of $350,000 or less. We’re making these changes knowing it will simplify and streamline the lending process and get more small loans into the hands of entrepreneurs, especially the underserved.”