SBA Lending

Are you afraid of SBA lending? Too much paperwork? Not worth the time? Too much risk?? Don’t feel you need to offer then to help your community??

Let’s look at ten $100,000 SBA loans in a loan portfolio that are 75% guaranteed by the SBA. Now assume the guaranteed portion of these loans have been sold. In today’s market you can get at least a 10% premium on the sale (actually it could be more, but let’s use 10%). Selling the guaranteed portion of the loans at a 10% premium would result in a $7,500 gain on each loan, for a total of $75,000.

Of the $250,000 in SBA loans remaining on the books, after the guaranteed portion has been sold ($100,000 less the $75,000 sale in the secondary market times 10 loans), let us now assume you lose 5% on the remaining loan SBA loan balances – or $12,500. This would leave the institution with a net gain of $62,500 on the original underwritten $1 million-dollar portfolio. If the secondary market for the guaranteed portion is higher than 10%, which it is now, the gain could be even higher. Since these loans typically make your financial institution a hero within your community, generally are accompanied with deposits, are “gold” with the regulators when it comes to your Community Reinvestment Act (CRA) program and result in a potential gain for the financial institution, aren’t these loans worth it? In addition, the regulators give the financial institution CRA credit for the original amount of the $100,000 loan underwritten not just the $25,000 remaining after the guaranteed portion has been sold.

If the financial institution is unsure on how to make these loans or think the staff is not big enough to take advantage of this opportunity, ABS can assist. Some of our experts have spent their careers dealing with SBA loans. We can not only help the financial institution with every facet of the SBA loan and its processes, but we can provide training to your staff in identifying potential borrowers and how to deal with the SBA. With the economy booming, you should not pass up these obvious opportunities. We can take all “the scary” out of it.

To see how this process works and costs for our various services, please contact us at 913-599-7471 or info@abs-core.com. We welcome the opportunity to meet with you