SBA Calls for More CUs: Onsite at NAFCU Caucus
WASHINGTON – The Administrator of the U.S. Small Business Administration, Maria Contreras-Sweet (pictured), told attendees of NAFCU’s 2015 Congressional Caucus that her agency is passionate about credit unions and has a strong desire to get more of them involved with small business lending.
Contreras-Sweet appeared on stage with NAFCU President/CEO Dan Berger and took questions from panel moderator Carrie Hunt, NAFCU’s senior vice president and general counsel.
Contreras-Sweet told attendees that she served as a community banker in the past, and through that experience became familiar with SBA lending. She recounted that her bank would often disfavor borrowers who wanted to use the SBA for loans because it found them paper heavy and expensive.
To help make SBA loans more appealing, Contreras-Sweet said that after she was confirmed by Congress, she rapidly streamlined the SBA loan process, particularly for loans of less than $50,000, and launched the SBA 1 program. She likened this program to TurboTax and Quickbooks, and said the agency’s goal was to cut the time and paperwork required for an SBA loan.
She also said the agency cut all fees on loans totaling less than $150,000 for both borrowers and lenders, and worked with Fair Isaac, the publisher of the FICO score, to make the scores easier for use with SBA underwriting.
While making these changes, Contreras-Sweet explained, she also realized the agency should reach out more to credit unions.
“I was in the middle of working to create a program that would help borrowers of less than $50,000, and I realized we had a network of financial institutions that were already well situated to reach these borrowers,” she said.
SBA loans of less than $50,000 should attract credit unions, Contreras-Sweet said, because the agency guarantees 85% of their principal. In addition, SBA guaranteed loans of less than $50,000 do not count against the business lending cap, she noted.
“If I were still in banking and I had loans that were 85% guaranteed, could be largely underwritten electronically, carried no fees and were free from a regulatory or compliance point of view, of course I would be interested,” she said.
Berger endorsed Contreras-Sweet’s message and recounted how the SBA reached out to NAFCU. He said NAFCU has found the SBA much easier to work with than other federal agencies that he has often opposed.
Berger called the SBA a “shining star” in the federal government, and added that the agency provided an example “of what government does right.”
“There is an urban myth still circulating about how the SBA is hard to work with and unreasonable,” Berger said. “But that’s not what NAFCU has found at all.”