One area where SBA Lenders continue to adapt to the multidimensional challenges of COVID reality is the virtual office environment. By now, many of us have finally figured out how to use the Zoom camera (or how to block it), make someone else a “presenter,” and keeping “Don’t forget the milk” messages from popping up on the screen during client presentations.

Encouraged by their newfound technological propensity, many lenders feel brave enough to take the next step into the uncharted waters of “productivity” technology: SBA loan origination platforms.

The PPP tsunami gave rise to multiple new loan processing software entrants that enabled lenders to streamline their PPP originations. Now that these entrants have sold clients on PPP software, some of them are attempting the next frontier: 7(a) originations.

Nothing wrong with trying. But buyers should beware: We all know how intricate SBA lending is, how many unknowns are in every loan, and just how unpredictable the process can be from one 7(a) loan to the next. Yes, the home mortgage market is proof that some types of lending lend themselves to automation. But you don’t want to be someone’s guinea pig while they are trying to figure out how to make their product work.

If you’re ready to take the technology plunge, there are a number of established SBA origination platform providers whose names you would recognize from NAGGL or regional SBA conferences. Their software streamlines many parts of the origination process, up to and including submission to ETRAN and loan closing.

These platforms will keep your borrower communications organized and consistent, loan documents easily found, credit memos uniform, and the chain of approvals transparent. For large volume lenders these platforms promise real and very meaningful efficiencies.

So, should you start scheduling demos and giving a heads up to your CFO? Maybe. But proceed with caution.

Ask yourself, do I need it? Hope I don’t get hate mail for asking this question. But we’ve seen a bank generating close to $200 million in annual loan volume go back to spreadsheets after struggling with an expensive brand-name platform. Then there’s another lender generating $50 million in annual loan volume using a big whiteboard as their “universal pipeline management solution.” And both of them are running “lean, mean origination machines.”

Here’s a rule of thumb: If a big portion of your loans are look-alikes, software has a better chance of helping you. But if none of your loans is like the one before ─ then think again. And SBA loans are usually the latter.

What about price? Some packages will set your IT budget back a nice six-figures. Yet we’ve found that the price range between platforms is much wider than their advertised capabilities. So be sure to comparison-shop and ask questions. A good way to do a software demo is to create your own “dummy” loan scenario and have the salesperson walk you through the origination process using their software.

Integration into your current process. This is a tricky one. If you have persistent bottlenecks in your process, buying a software platform IS NOT the solution. At least not yet. Your problem is either a lack of documented procedures or not following them. Once you have your department operating like the Golden State Warriors in their best games, it’s time to take it to the next level with origination software.

Bottom line: There’s definitely room for process improvement with SBA origination software. But don’t get caught in an expensive technological efficiency trap. We’ll touch on few other considerations and options in our next eBulletin. So stay tuned! And if you want to chat about your current origination process, Contact JRB.

Alex Liberchuk, Principal
J.R. Bruno & Associates
855.JRB.4.SBA (855.572.4722)