SBA works to ‘streamline,’ expedite loan approvals

The top managers of the U.S. Small Business Administration told a gathering of lenders and SBA staffers in Newport last week that they are overhauling their programs, in part to reduce the paperwork and the hassles involved in getting an SBA-backed loan.
Those managers, including Joel Szabat, SBA’s chief of staff, repeatedly used the terms “re-engineering” and “streamlining” to describe the changes to attendees of the two-day America East Conference for SBA Lenders.
Reforms range from simplifying loan processing procedures to redeploying staff members to better cover busy district offices. The changes are intended to make it easier for SBA staff members and the lenders they work with, thereby speeding up the processing time, agency leaders said.
Terrence Hetherington, director of the SBA’s National Guaranty Purchase Center in Herndon, Va., said he likes to think of lenders as co-workers in helping small businesses obtain financing.
“You’re my co-worker and we have to work together to get things done,” Hetherington told the 275 attendees, who came from all along the East Coast.
In a keynote speech, Szabat said the SBA has already implemented some reforms since Steven C. Preston was appointed administrator last year, but the work of simplifying and improving customer service continues.
Szabat said there was a lesson to be learned in the disparity between participation in the SBA’s 7(a) loan program, which offers up to an 85-percent guaranty, and the SBAExpress program, which has a guaranty of only up to 50 percent but avoids the lengthy process lenders and business owners otherwise must go through when seeking SBA backing.
“Our Express programs are the fastest-growing,” Szabat said. “Almost all of our growth over the last couple years has come from the increased use by our lending partners of the Express program.”
SBA administrators realized that “the ease of doing business is more important to our lenders than the increased guaranty you get with the 7(a) program,” Szabat said. “If you hit us over the head enough times, we’ll get the point.”
“We’re trying to make reforms in all of the lending programs to make them easier for those of you who do business with us and help serve the small-business community that we’re trying to reach out to,” he added.
By Szabat’s account, the SBA is already succeeding.
In the wake of Hurricane Katrina, the SBA was criticized for delays in processing low-interest federal disaster loans for storm victims along the Gulf Coast. When Preston was appointed in June 2006, Szabat said, the disaster program had a backlog of 160,000 loan applications.
Now it is down to 1,500 applications and the SBA has undergone many changes to better handle large-scale disasters, including the addition of 3,000 reserve employees and an improved computer system.
Szabat said SBA managers have also put renewed emphasis on another duty of the agency: steering a fair share of government contracts to small businesses.
Still, the agency has been dealing with budgetary and staffing obstacles, Szabat said, noting that the SBA payroll has been reduced from 4,000 employees at the beginning of the Clinton administration to 2,000 currently. Also, Szabat said, the budget has been cut by a third.
“At the same time, the things we do that matter to the community we serve — the number of small business loans in dollar value – doubled,” Szabat said. “The number of government contracts that we helped steer to small business also doubled. So we’re proud of our effectiveness while cutting our staff and cutting our budget. That’s almost unheard of in the public sector.”
Frank Borchert, SBA general counsel, said one of the best illustrations of where the agency could streamline is the loan-processing form titled SOP 5010. It’s more than 700 pages long and “significantly out of date,” Borchert said.
“A decision was made to do something about this … to make it easier for the lenders to use,” he said. “It’s a great opportunity for us to make sure that we come through with a product that ultimately meets everyone’s needs.”
Borchert said the SBA expects to have a redesigned document that is also Web-accessible by the end of the year.
In light of the staffing reductions, George Koklanaris, director of the SBA’s Office of Strategic Alliances, said SBA managers have employed a mathematical algorithm to ensure that each district office nationwide has the proper staffing. He said it has been successful.
“A lot of district offices were not set up evenly,” Koklanaris said. “But it is important that each district have the number of personnel that it needs to be able to market its products both to the banking community and to the small business community.” •

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