According to the latest CNBC Small Business Survey, small business confidence ticked up in the second quarter of this year and continues to be at a high level. We continue to be blessed with an economy that’s doing well. And yet, OCC’s Comptroller of the Currency recently remarked that “The worst loans are often made in the best of times.”
We all know that the lending business is cyclical. With good times, confidence grows, and lending expands. As lending expands, higher volume can lead to a higher number of defaults. Since we’ve seen unprecedented growth in lending volume over the past few years, it’s only natural that we’re beginning to see more loan defaults in absolute terms.
Sometimes, in good times, a bit of lender complacency can creep in.  At the recent NAGGL Conference, OCRM Director Susan Streich  specifically named “Periodic Internal Checkups and Regular Due Diligence Reviews” as attributes of a successful SBA lender. There was also quite a bit of discussion about SBA forecasting a spike in loan defaults.
At JRB, we continually stress the importance of regular loan portfolio reviews. Is your SBA guaranty safe for every loan in your portfolio? As the good times roll on, now is the time to:
  • Conduct a review of your portfolio to ensure the safety and soundness of loan guarantees
  • Run a few “stress scenarios” to identify possible portfolio weaknesses
  • Ensure that you have departmental knowledge to deal with the guaranty purchase process.

“Semper Paratus” (Always Ready) is the motto of the United States Coast Guard. So it should be for a prudent SBA portfolio manager. We also are “Always Ready” to assist our clients with all their SBA lending needs. Contact JRB!

Alex Liberchuk
Principal, Strategic Operations