SBA Cuts the Fat from Its Loan Process

Industry Report – Small Business Administration LendersINDUSTRY REPORT – The U.S. Small Business Administration (SBA) is known for guaranteeing loans from banks and other lenders to small businesses. But it is also known for requiring a lot of paperwork and making lenders and borrowers wait a long time for approval.

But last year more lenders than ever took advantage of a program called SBA Express that reduces the time and paperwork required to get federal guarantees on loans of up to $350,000.

“Paperwork has been dramatically cut down,” says Jim Kosci, director of the SBA’s New Jersey district. “We let banks make the call, and we do what amounts to a cursory review.”

SBA Express loans accounted for three quarters of the loans to New Jersey companies guaranteed by the SBA last year. The average SBA Express loan was $51,828, a 9 percent drop from the previous year.

“We’ve had a lot of banks increase their activity with SBA lending and a lot of smaller community banks have gotten into it,” Kosci says. “Previously, lenders found that small loans were not worth their time.”

There are 13 new SBA lenders in this year’s list of the Top 50. The SBA guarantees loans of up to $2 million.

The program, initially called “fast track” loans, picked up in popularity four years ago and continues to enjoy growth. “We are seeing more $10,000 to $15,000 loans,” Kosci says.

Cherry Hill-based Commerce Bank led New Jersey SBA lenders in dollar volume last year, with $108.4 million spread over 272 loans. PNC Bank was second, with $67 million spread over 520 loans.

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