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Credit Scoring Model Helps South Florida Lenders and Small Business Secure Big Gains

Opinion By Regional Administrator Cassius Butts, Region IV
Release Date: 
Thursday, August 28, 2014
Advisory Date: 
Tuesday, September 2, 2014
Lola Kress, (404) 331-2798

Helping banks get to “yes” on small business loans has never been more important to America’s economic health, because it’s smaller firms that have driven our recovery, both nationally and locally. Entrepreneurs are creating nearly 2 out of every 3 private-sector jobs. Federal Reserve Board Chair Janet Yellen said, “small businesses deserve a considerable share of the credit for the investment and hiring” that powered our recovery following the financial crisis and credit freeze.

Throughout the Southeast, SBA is working tirelessly alongside banks to join our lending network and increase their lending activity to small business owners like you. We’ve recently rolled out a credit scoring model for small dollar loans of $350,000 or less, combining personal and business credit scores to streamline the lending process. With this model, we are eliminating the requirement for banks to submit cash flow analysis on loans of $350,000 or less, cutting time and cost of applying for an SBA loan. We’ve tested this system for over 10 years, and the default rate is remarkably low.

This model helps lenders generate more loans and ignite economic activity. Establishing a quicker, cheaper, and consistent loan process model will help existing lenders do more small-dollar lending. This will inevitably support the small business environment, especially underserved small businesses because it expedites access to essential capital.  Additionally, this credit scoring model is further enhanced by the well-known FICO Small Business Scoring Service Product, therefore both lenders and small businesses win.

SBA’s credit scoring model is ensured to work for lenders and small businesses, because it has a proven track record of billions of dollars in loan approvals. For example, Crangiel, LLC in south Florida has successfully used SBA’s credit scoring to be eligible and secure $110,000 through SBA-lender, SunTrust Bank. This is one of many successful loan stories that participated in SBA’s reliable loan process through the credit scoring model.

Approval of smaller loans is a vital part of our promise of equal opportunity in America.  A study by the Urban Institute found that women and minorities are three to five times more likely to be approved for an SBA-backed loan than a traditional bank loan. In other words, if the SBA doesn’t get capital to these entrepreneurs, often no one will.

Therefore, I call on our local lenders to work with us at SBA to quickly advance loans and expand capital access by using our quick credit scoring model for small dollar loans.

Contact SBA South Florida District Office’s Lender Relationship Specialist, Miguel Gonzalez, (305) 536-5521 ext. 141.