About now, your institution is in strategic budget planning sessions for the next fiscal year. You’re taking a look at your lending portfolio as part of the process and making important decisions: Expand your portfolio? Offer new products? Hire additional staff?

What’s your plan? Growth is important to stay competitive, but planned growth is the key to long-term success. Here are my Top 5 Keys to long-term SBA lending success:

Identify your goals. So you’re looking to grow. How? If you’re an SBA lender looking to grow your portfolio, how many loans and at what levels are you planning for? Are you considering a focus on $ 1 million+ loans or possibly putting some emphasis on 504 loans? Is your ideal dollar loan volume consistent with your goals?  If you’re new to SBA lending or thinking about getting into the market, what’s your strategy?

Analyze your current capacity. Ask yourself: “What have I got?” “What do I need?” What comes first the chicken or the egg? Do you hire first and then grow the program or the other way around? If you have a small department with five or fewer staff, will you need to add staff and equipment? If so, how many, how much and at what cost? Answering these questions ahead of time will help determine your next steps. It’s also important to plan for eventualities, such as the possibility of a spate of unexpected loan growth. You might be content with your program when suddenly a spate of loans comes in through word of mouth. Do you have a backup plan or will you be playing catch up?

 Processes and tools. Are your current processes consistent with your goals? Some things to consider: For existing SBA lenders, do you need to upgrade? For commercial lenders new to SBA, will you need to implement any systems changes? Is your processing system compatible with SBA? Do you need more tools? Templates? Software?

 Hiring. Do you hire from within or go outside? At JRB, we’ve seen this dilemma many times, especially for newer and start-up SBA lenders. We’ve seen lenders using commercial lending staff as a base and bringing in one or two SBA lending experts to lead the team. We’ve also seen institutions bring in entirely new SBA lending staff. There’s a downside to this option. Often when one team member leaves, the others will follow. And we’ve seen lenders with existing commercial staff transition them to SBA lending and outsource key functions. Again, planning is key. Analyze how you’ll go about this and how much you’re willing to invest.

 Training and procedures. Providing adequate staff training and having written procedures in place are critical to successful SBA lending. You want your SBA lending department to run like the proverbial well-oiled machine – proficient in SBA loan programs and processes and operating with well-defined rolls and responsibilities.

 Looking to grow? One thing for sure: You gotta plan!

Rebecca Mendoza
Senior Associate