Feedback Friday — The Spike in SBA 7(a) Loan Charge-Offs

April 17, 2015

By Bob Coleman
Editor, Feedback Friday

SBA 7(a) Loan Workout Guru Timothy Yentsch of Rhode Island’s Independence Bank writes with an explanation of the uptick in SBA 7(a) charge-off rates.

He says . . . . .

SBA has begun to rapidly catch up on charge offs after

  1. They hired more people
  2. Herndon combined the charge off and expense review so cases no longer go through 2 separate queues. This also gives more impetus to resolve small expense adjustments and was a good strategic decision.

This could cause a bump in the charge-off rate but a decrease in the overall liquidation and charge off rate. (I’d be really interested in the numbers)

Overall loan performance is better and successful workouts are much more common.

The effects of 2008 are still felt in single family home refinances. That method of funding compromises has become rare leaving hardship cases with equity “stuck” in liquidation. A creative solution is needed.

Wayne Ballenger of First Bank Business Banking in Missouri chimes in . . . .

I just read the snipped from one of your readers entitled Regarding SBA’s Plummeting Charge-Off Rates and how they had Wrap Reports dating to 2013 that had not been acted upon by Herndon.

I don’t mean to engage in one upmanship, but a week ago one of the good people in Herndon asked us for more information on a loan that was charged off in 2005! I have dealt with a number of good, hardworking people in Herndon who are doing their very best to clear these old loans. BUT, the charged-off loan volume in Herndon, I am told by several of these folks, is totally overwhelming.

We continue to wish them the best.

SBA’s 2014 Goals

One reader took exception to SBA’s calculation of the percentage of goal attainment, saying the calculations were actually 92% (513/555 lenders) and 94% (1392/1480) of lenders.

SBA wrote, ‘The SBA met 98 percent (513 lenders) of its FY 2014 export lender goal, and the SBA met 98 percent (1,392 small businesses assisted) of its small business assisted goal.’

SBLC Licenses

With the reporting of the sale of the Small Business Capital SBLC license, Connally Bradley of BDC of South Carolina wants to know who own the other 13 licenses.

Here is what I have. Please correct errors!

American Business Lending, Dallas
BCI Lending Services, South Carolina (Acquired by United Community Bank)
Capital Spring, New York
Ciena Capital, Washington DC
CIT Small Business Lending, New Jersey
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
Small Business Capital, California (Pending Sale to Business US)
Superior Financial Group, California
The Loan Source, New York

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