May 1, 2015
By Bob Coleman
Editor, Feedback Friday
Several lenders said they were shocked about Pacific Mercantile Bank’s decision to end accepting SBA loans from loan brokers and laying off their 15-person SBA loan department. Two lenders said that was forcing them to rethink their strategy of accepting loan broker referrals for SBA loans.
They wanted more information and I told them I don’t know the backstory of what happened, and I won’t speculate.
What I will say, is a common theme in Coleman training is to vet your loan brokers as you would an employee.
Do the background checks, run credit reports, check references. Have a formal agreement spelling out conflict of interest policies.
There are a number of good loan brokers that can generate a nice pipeline of business.
Unfortunately there is a long list of lenders who have regretted doing business with certain loan brokers.
Character is the first C in dealing with loan brokers.
Mark Feathers isn’t going quietly into the night.
He told me he threatens to sue SBA regarding the proposed’ receiver’s sale of the Small Business Capital SBLC license to BusinessUS.
Mark was found personally liable for $7.8 million of “ill-gotten gains” by a federal judge after the SEC seized his non-bank SBA lending company for running a three-year $42 million ponzi scheme.
He is also under criminal indictment for 29 counts of fraud.
‘Please be advised that I intend to very shortly file suit against SBA for its portending violations of the Administrative Procedures Act.
‘With my filing I will ask for an emergency injunction at that time to stay any sale of Small Business Capital, LLC’s, SBLC license or any other assets owned by Small Business Capital, LLC. For the basis to this lawsuit, see pages 7 and 8 of the attached, and as they relate to SBA as a party-in-interest in the lawsuit SEC v. Small Business Capital Corp.
‘I have not yet determined which court I will submit this lawsuit in, and which has proper jurisdiction. It may be the United State Court of Federal Claims.’
The Current SBLC License Holders
Thanks to all of your great feedback! Here is the current list of the 14 nonbank lending SBA lending licenses.
American Business Lending, Dallas
Capital Spring, New York
CEI 7(a) Financing LLC, Wiscasset, Maine
Ciena Capital, Washington DC
CRF Small Business, Minneapolis
GE Capital, St. Louis
Grow America Fund, New York
Hana Small Business Lending, Los Angeles
Newtek Small Business Finance, New York
PMC Commercial Trust, Dallas
ReadyCap Commercial, LLC, Irvine
Small Business Capital, California (Pending Sale to BusinessUS)
Superior Financial Group, California
The Loan Source, New York