C-Suite Wednesday — Most SBA 7(a) Lenders Hit Their Numbers, Many SBA 504 Lenders Don’t

October 14, 2015

By Bob Coleman
Editor, C-Suite

C-Suite Wednesday — Most SBA 7(a) Lenders Hit Their Numbers, Many SBA 504 Lenders Don’t

Last week, I asked SBA lenders how their numbers look at the close of the government’s fiscal year on September 30th.

First, thank you to all who voted. You are providing great feedback for the industry!

Here are the results

We exceeded our SBA 7(a) loan expectations.
True — 58%
False — 21%
N/A — 21%

We exceeded our SBA 504 loan expectations.
True — 34%
False — 42%
N/A — 24%

I am on track to exceed my 2015 personal goals.
True — 70%
False — 30%

My department is on track to meet its 2015 budget.
True — 73%
False — 27%

Finally I asked for open ended responses for thee most surprising challenge faced this year. Here are some of the responses

1) Many blame SBA as the surprising challenge resulting in a decline in their SBA 504 numbers.

Lack of SBA support for the 504 program.

Dealing with SBA’s loan processing center

Sacramento’s focus on form over function. Process over common sense.

Continued bias against 504 by banks and by SBA itself.

SBA scrutiny of SOP issues not related to credit concerns.

2) Several voiced concerns of forgetting the past and we are back to the future with our pre-recession future mindset.

Banks appear to have reverted back to their pre-recession lax underwriting standards. Competition is so fierce that loans we will not touch without an SBA guaranty are being done conventionally.

Competition with low fixed rates.

Irrational competitors both re: credit and pricing.

Unfair competition

Too many commercial lenders and too much bank liquidity chasing too few strong borrowers. No need for SBA 504 or other enhancements.

3) A surprise that logistics refuse to run smoothly is always a common theme.

Continuing delays in getting closing documentation. You would think we were asking them for money instead of trying to fund their loans!

Getting loans over the finish line.

Getting Senior Management to want to process “true SBA Loans”. One bad concept and/or franchisee seems to ruin it for other concepts.

Customers that apply for loans then don’t follow through with the required documents especially for loans under 150K.

4) Finally, surprise economic trends are always challenging.

The dramatic decline in the price of oil has greatly affected the loan demand for oilfield related customers and our Bank is located in the heart of the oilfield.