SBA’s Loans Stirring Up a Hornet’s Nest | SBDC UNF

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SBA’s Loans Stirring Up a Hornet’s Nest

From the Herald Tribune of Sarasota comes this story about the wildly popular SBA Community Ecpress program. This was a pilot project that set limits on the volume any participating lender could fund per month. It has become a contententious issue particularly in this present tight lending environment.

The fight has become ugly, and small-business borrowers are getting pummeled.

The U.S Small Business Administration’s Community Express pilot program has been the last vestige of hope for many entrepreneurs that need to borrow small amounts of money to start a business. It was designed to qualify borrowers with average credit scores and no collateral.
Every month, hundreds of borrowers have been snagging $5,000 to $25,000 in about one week after making application. Better-qualified applicants got up to $50,000.
But more recently, Community Express has been caught up in a bureaucratic stalemate between SBA and the lenders that have made the program so popular. Even more repugnant, personalities have gotten in the way of finding solutions, and each debater is trying to out-muscle the other.

The most contentious issue is SBA’s rationing of the total number of Community Express loans that each lender is permitted to make per month. When the lending cap was imposed in May, the agency invoked a little-used rule allowing them to limit the number of loans for its pilot programs.

But the lenders countered that Community Express should be made permanent and the cap removed because the program was designed for marginal and minority borrowers whom the banking system otherwise neglects.
Tim Jochner, chief executive officer of Superior Financial Group, met with SBA representatives Dec. 10 in a continuing attempt to end the rationing. The meeting was combative, and SBA responded with a press release that, in my opinion, tries to silence the messenger.
SBA did not immediately reply to my e-mail questioning why the agency seems angry and is going public with this personal battle.

According to the press release, “SBA raised concerns regarding Superior’s: Misrepresenting facts about the Community Express program; Public release of confidential and privileged SBA portfolio information; Apparent unwillingness until recently to offer other SBA loan products besides Community Express that could meet borrowers’ needs.”

SBA also asked the Inspector General to investigate the program for predatory lending even though it has audited the program’s lenders.

Superior Financial Group’s Web site posts an “ACTION ALERT” that asks visitors to petition Congress to lift the cap. SBA posted its rebuttals in press releases under the “SPOTLIGHT” button of its home page sba.gov.

The two other area Community Express lenders are Innovative Bank and Borrego Springs Bank. You can learn more about all three lenders and their programs online at superiorfg.com, innovativebank.com and

tcrispen@b-s-b.net. The lenders are taking applications even though the rationing continues. That means you may have a long wait to get your loan funded.

Note: we use the following contact info for Borrego: http://www.borregospringsbank,/not tcrispen@b-s-b-net and the UNF Small Business Development Center does not work with Innovative Bank.
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