Article by Roger Schlueter
I have worked with SBA for my whole career and have seen changes that I do not feel very good about. The changes that I talk about are the change of control from local to national in the evaluation of loans and in the interpretation of loan policy.
SBA in the Eighties, Nineties, was controlled by the local SBA office and loans were approved and serviced by this office. The employees were accessible and accountable for their actions and could help a business by looking at the whole picture in the evaluation of a Loan. The employees because they were approving loans seemed to know the loan policies and rules and regulations much more than they do currently. I do not blame the employees, they do not run into the same problems they had, when they were approving and interpreting loan policy. The Staff is a marketing arm now and as such will many times sugarcoat their discussion of loan products with borrows. They are Salesmen now and tend to look at the bright side in selling to Banks and Borrowers.
Currently the SBA has offices in California that approve all loans and interpret policy and rules and regulations. The communications are done though Nameless Email and you never know who is working on you loan. The SBA 504 Loans have been operated this way for three years or more and the SBA 7a or Guaranteed Loans are moving in that same direction. It’s kind of like there are no real people anymore, just a faceless SBA, kind of like in OZ – the Great and Powerful OZ that hid behind the curtain and projected his created Image on the screen. They evaluate the Local Banks and Certified Development Companies and shy away from the tougher projects that most of us small local people seem to have. The Banks seem to do the easy projects and leave the tougher and harder to finance project, to do with a SBA Guarantee.
SBA is also moving toward using the Personal Credit Report and Credit Score as the determining Factor. This is just like the big banks and will result in the same result – most small difficult projects will be passed by for the “Low Hanging Fruit”, the easier deal, that should probably be done by the local bank without SBA assistance. The SBA also has a bent toward the larger deals and give awards to the entities that do Large Dollar Amounts of loans rather than the Larger Number of loans. The larger number of deals seem to help more businesses and help businesses that really need the help. These are the deals that neither the bank or the SBA wants to do. The Key here is Marketing Ability. What kinds of projects create the largest amount of Dollars and the most jobs regardless of whether they really need the Government Help or not. These Numbers of Dollars of loans and Numbers of Jobs Created are what the Government Wants to Generate so it can use this information to Justify It’s Own Existence and Laud over the Number of Jobs and Investment the SBA has Created.
What I would like to see in the future is a Local Office that could influence the National Office on at lease some projects in their area. What I would like to see if SBA Local Personnel that have actually Package a Loan or Two so they will see what is encountered at the national level. I would like to see a SBA Office that likes to Help the Small Business and doesn’t care as much about how large the project is or how many jobs are created by the financing. One Small Company creating One Job is usually the equivalent of a Larger Small Business creating 100 Jobs but the large Small Business usually does not create that many jobs. The SBA need to be focused on Helping Small Business instead of evaluating and marketing with a faceless Organization.
Please respond to this Blog or directly at roger@rogerschlueter.com