Recent banking failures raise the question, “what does the future of finance hold, especially for small business loans?”

To find out, Jeff sits down in person with Kris Puskar, Senior Vice President of Business Banking Sales /Innovation Director at Eastern Bank, and Christina Brozyna, Head of Business Banking Sales & Operations/Executive Vice President at M&T Bank at CBA Live 2023. Both are well-qualified to weigh in, holding positions on the Small Business Banking Committee at the Consumer Banking Association as Chair and Vice Chair, respectively.

Join us as we discuss:

• The rise of SBA lending 
• Innovations in the SMB space
• Why the demand for SBA programs is soaring

The rise of SBA lending

As the dust settles from the Silicon Valley and Signature Bank failures, the lending world works to navigate new expectations and higher rates of deposits while retaining members. An unexpected stand out among the changes is an increased demand for SBA loans.

Small business loans have proven to spread out between larger financial institutions, community banks, online banks and some smaller credit unions, which is good news overall.

“Understanding the programs offered through the SBA is critical for your institution so you can offer those to your clients,” Puskar said. 

Puskar laid out a few ground rules for a successful SBA partnership:

• Build a strategy and stay on top of SOP guidelines
• Invest in a good relationship with your local SBA office to gain feedback
• Set up reliable controls to avoid putting SBA guarantees at risk

“Going from doing a few to doing hundreds is an easy transition when you have those controls and the right folks in place,” Brozyna said. “This is not an area where you try to reduce staffing and hope it all goes well. If you staff appropriately and follow the controls, you can scale it very quickly in a meaningful way.”

Innovations in the SMB space

Customers appreciate end-to-end digital experiences that leverage simplicity and speed, and some fintechs are working to streamline the small business lending process.

“There's a demand for that, so I think you'll see an increase. Right now, some banks have that, typically for smaller dollar loans. But I think that will continue to grow.” Puskar said.

Special Purpose Credit Programs — offering support to small businesses owned by people of color, women, veterans, LGBTQ, people with disabilities and other underserved communities — are currently on the rise.

“There are some great programs out there that, if you partner well with the SBA on programs, you can probably lend to more customers than you typically would be comfortable with because they provide guarantees on the loans.” Puskar explained.

Why the demand for SBA programs is soaring

“When you think about the SPCPs and serving underserved communities within small business, I think there is a demand, but also, the SBA has also come out and said they want to be able to help banks funnel more dollars into the communities, both in terms of underserved communities, but also small business in general,” Puskar said.

Small businesses want guidance and advice. They’re looking for support and a way forward during the turmoil of our economy, and these programs can help provide that clarity.

“We feel great about making a difference and spending time and having those interactions. Also, your larger, more stable clients are funding their own transactions, acquisitions, or whatever investments they’re making in their business.” Brozyna said. “It's a perfect balance because there's capacity in the market. This is a place where we can make a difference.”

Stay tuned for new episodes every week on the Leaders in Lending Podcast.