Independent Banker - November 2023 - 23

Next: Revisit your digital strategy 
that can help optimize your small
business lending platform.
Create a separate small
business lending policy.
Community banks need to
differentiate commercial lending
from small business lending with a
clearly defined policy. A small
business customer that is looking to
purchase a $60,000 truck for their
lawn business may not be able to
bring in the three years of tax returns
typically needed to get a commercial
loan. Critical elements that a loan
policy should address are
underwriting guidelines, collateral/
documentation requirements and
risk tolerance.
1
Declutter the loan
application process. It's
important to acquire all the
information you need in the initial
meeting, says Jay Blandford, CEO of
Abrigo, a banking software provider.
What is absolutely necessary to collect
to make a decision, honor your credit
culture and be competitive? Do you
need three years of tax returns, or are
you comfortable with two?
2
Get everyone on board.
Underwriting small-dollar or
SBA loans is very different from
underwriting bigger loans with
seasoned borrowers. SBA customers
typically won't have 150% liquidity
and multiple income sources. " Getting
our credit team and our bank on
board with how they are structured
differently and why we're doing them
is something that you have to hit
head-on in order to have a successful
department, " Horner says. " You need
buy-in from everybody. "
3
Leverage your retail
banking partners. It can be
difficult for commercial loan officers
4
process itself takes about four weeks
from start to finish.
" We want to be
that stepping
stone to help
[small businesses]
graduate from SBA
and move on to
more conventional
lending. "
-ASHLEY HORNER, SUMMIT BANK
Level the playing field with
technology. Community
banks that face competition from
large banks and fintechs for small
business customers need to operate
more efficiently to improve
profitability and provide a better
experience for the customer.
Summit Bank invested in the nCino
platform from Salesforce to improve
workflows for its lending team. The
community bank also closes all loans
with DocuSign so that the business
owner can sign documents at their
convenience. That has created huge
efficiencies in being able to close on
loans and get funds in the hands of
the borrower, adds Horner.
6
7
who have large commercial loan goals
to focus on the smaller loans and still
give them the attention they need.
SouthState Bank leverages its branch
managers, providing training and
underwriting tools so they can
originate loans for customers in their
markets. The community bank also
added fully dedicated small business
bankers across its footprint to assist
its small business customers.
Provide fast answers. Speed
is a big focus for small business
customers, and community banks can
differentiate themselves by providing
answers and approvals quickly. It's
OK to tell an applicant " no, " but
business owners want to hear that
answer quickly so they can explore
other options. Once financials are in
hand, Summit Bank typically makes a
decision on a loan within three
business days. The underwriting
5
Conduct a regular task
analysis. One of the
challenges of small business loans is
that there are numerous tasks,
touch points and data entry that
need to be done to shepherd a loan
from start to close. Banks should
routinely take inventory on their
workflows and the data they collect
to look for tasks that can be
eliminated or automated.
Be a trusted advisor.
Bankers can build deeper
relationships by adding value, such
as providing guidance and
educational resources. Share
opportunities for business owners to
improve margins, restructure debt
to improve cash flow or reduce
interest expense. " Relationships
don't always need to be
8
transactional, " says Blandford, " and
community banks are in a unique
position to do that. "
Beth Mattson-Teig is a writer
in Minnesota.
independentbanker.org // 23
http://www.independentbanker.org
Independent Banker - November 2023

Table of Contents for the Digital Edition of Independent Banker - November 2023
