WASHINGTON (6/12/14)--Maria Contreras-Sweet, administrator of the Small Business Administration (SBA), announced new steps intended to ensure a more inclusive atmosphere for entrepreneurs. Speaking at the Center for American Progress here Tuesday, Contreras-Sweet outlined several ways the SBA would go about simplifying access to services and capital for small businesses.
She said "technology is the key" when it comes to bringing capital access systems up to speed with new ways consumers are accessing financial services.
"The prevailing challenge we face has been that our loan documentation is too complex and labor-intensive," Contreras-Sweet said.
She announced a new process by which the SBA can bring new lenders into the SBA system, while augmenting loan volume and multiplying points of sale. The SBA's Office of Capital Access has been testing a predictive business-scoring model for the past decade, which will combine an entrepreneur's personal and business credit score, making it easier for financial institutions to do business with the administration.
"This model is cost-reducing and credit-based. It ensures that risk characteristics, not socio-economic factors, determine who is deemed creditworthy," Contreras-Sweet said.
The new business-scoring model will be combined with another new initiative called SBA One, an interactive, user-friendly lending platform designed to automate uploading of documents and generation of forms for SBA 7(a) loans. The platform will also allow electronic signatures.
Contreras-Sweet said the combination of the new scoring and SBA One will save financial institutions "hours of processing time and thousands of dollars" on each loan, while encouraging more institutions to partner with the administration.
"By making the process quicker, cheaper and more intuitive, these reforms will help existing lenders do more small-dollar lending," she said.
In addition to the streamlined loan process, Contreras-Sweet said she also hoped to tailor more programs to connect women, minority and veteran-owned businesses with capital, as well as serving as a "market maker" for small businesses by opening new channels within the federal government, corporate supply chains and international commerce.
In March, the SBA extended a 7(a) guaranteed loan program fee waiver into 2015, an action the Credit Union National Association called "an effective way to increase borrower participation in this important SBA loan program." Under that waiver, there are no upfront and annual fees of 7(a) loans of $150,000 or less.
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