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Using the SBA Lender Portal as Insight

Check out the new Complete Connect article by Karen McHugh – Using the SBA Lender Portal as Insight

SBA communicates its risk assessment and lender ranking every calendar quarter. The Lender Risk Rating (LRR) is SBA’s assessment of a lender’s potential risk to SBA based on quantitative and qualitative factors. Lenders are credit scored quarterly and ranked with a score from “1” to “5” (1 being least risk and 5 being most risk). The ranking is a measure of predicted performance over the next 12-month period.

The LRR can be affected by adjustments (other than the credit scoring) such as:
• Loan Reviews
• Cease & Desist orders by financial regulators
• Rapid growth of SBA lending
• Early default trends

The Lender Portal information is an aggregate of the credit quality of each lender’s SBA portfolio. It also allows SBA to monitor and conduct off-site reviews of lenders and serves as the primary means of reviewing lower volume lenders. It also serves to assist in prioritizing on-site reviews for higher volume lenders.

Lender Peer Groups
Lenders are divided into six different peer groups for analysis. The lenders in large peer groups represent a greater risk.
Group A: $100,000,000 or more
Group B: $10,000,000 – $99,999,999
Group C: $9,000,000 – $9,999,999
Group D: $1,000,000 – $3,999,999
Group E: $0 – $999,999 (active)
Lenders disbursed at least 1 loan in past 12 months
Group F: $0 – $999,999 (inactive)
Lenders did not disburse at least one loan in past 12 months

Lender Rating
The lender ranking falls within 5 categories:
1. Strong Portfolio Performance
• Least risk, least degree of oversight
• Well below average historical purchase rate
2. Good Portfolio Performance
3. Average Portfolio Performance
4. Below Average Portfolio Performance
5. Weak Portfolio Performance
• Highest risk, most degree of oversight
• Well above average historical purchase rate

Lender Portal Components
SBA updated their analysis approach in March 2010. There are 11 components used in the lender rating for 7(a) lenders. They are:

• Past 12-month actual purchase rate
o Provides risk-measurement reflective of actual guaranty purchases
• 6-month liquidation rate
o Loan in liquidation over the past 6 months (as determined by the lender)
• Gross past due rate
o Loans 30-59 days past due
• 6-month net flow indicator
o Measures net dollars in and out over the last 6 months
• Average small business predictive score (SBPS)
o Score based on borrower’s business and personal credit reports
• Projected purchase rate
o Predictive measure of future riskiness over the next 12 months
• $ Weighted average financial stress score (FSS)
o Predicts likelihood that the borrower will experience adverse event in next 12 months
• PLP Percent
o % of lender’s PLP loan $ outstanding compared to total loans outstanding
• SBA Express Percent
o % of lender’s Express loan $ outstanding compared to total loans outstanding
• Portfolio Size / Age – divided into 3 segments
o Less than or equal to $4 million in outstanding guaranties (least risk)
o More than $4 million in outstanding guaranties and average loan age of greater than 30 months
o More than $4 million in outstanding guaranties and average loan age of less than 30 months (greater risk)

If you are not monitoring your Lender Portal, you should. A senior officer of the lending institution must request access. Go to http://www.sba.gov/olo/lender-portal-html for more information.

We want to be your “go to” team for whatever needs you may have in the SBA lending world. To learn more about the all-inclusive SBA lending services of SBA Complete, go to www.sbacomplete.com or call us at 800-801-2378.

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