How SBA BDOs Use Document Collaboration To Close Deals Faster

For the past 20 years, small businesses have generated substantial economic growth and employment in the United States. Fueling that economic growth, the United States Small Business Administration (SBA) provides loans to small business owners through its loan guarantee and subordinated debt programs, the 7a and 504 programs, respectively. There is substantial demand for small business loans in the US. However, the competition is fierce among SBA lenders. Prospective borrowers are “shopping” their deals (i.e., getting a letter of intent from one lender and using it to attract other lenders for better deals). Previously, I worked with an SBA lender with successful SBA loan officers. They argued that a key tenet of succeeding in the SBA loan origination business is to (1) offer a good product at a competitive rate and (2) get the deal quickly off the street. This greatly improves your chances of ultimately closing the SBA loan with the prospective borrower. A primary challenge that SBA loan originators face is getting your perspective borrower to give you all the documentation you need. The SBA loan originator needs this documentation to determine whether the borrower is SBA-eligible. Borrowers are notorious for procrastinating on getting documents to SBA loan originators. Many believe that while the prospective borrower is gathering his documents, he is secretly shopping the deal with other SBA origination officers. How do you get the prospective borrower, his accountant, his other company officers (if any) to promptly get the documents you need to you? Some SBA lenders offer an online portal that allows prospective borrowers to enter their information and upload needed documents. This method is certainly efficient; however, it does not address the problem plaguing prospective borrowers – procrastination. The better method for getting documents timely completed is to work collaboratively with the prospective borrower to get the documents done.

Real-time Editing SBA Forms

Here is just one example of how using document collaboration can speed up the letter of intent or commitment letter process. One of the forms required by SBA is the 413 form. The 413 form is the form prospective borrowers complete to list their personal financial statement. To accurately complete the 413 form, it may take input from the borrower, the borrower's spouse, the borrowers accountant, and the SBA loan originator. Using the Crimson eContracts platform, the SBA loan originator can post a word version of the 413 form. He can then invite the prospective borrower, the perspective borrower’s spouse, the borrower’s accountant, even the borrower's attorney to collaboratively work on the 413 form. Once all parties are logged into the platform, the SBA loan originator can allow any of the parties to input information directly into the 413 form. If there is historical information that needs to get added, the accountant can search her office files while online and add the information in real time. The SBA loan officer can also use a spreadsheet within the platform and share its use with all parties online. Once completed, all participants can review the final document, make comments or edits as needed, and create a clean version for the borrowers' and borrower spouse’s signatures. Crimson eContracts then allows the SBA BDO to convert the text version of the 413 form into a PDF document. He can then send this PDF document to the borrower and the borrower's spouse for electronic signatures. The SBA BDO can also conduct a video conference while editing the 413 form.

Group Collaboration For Loan Documentation

Working with borrowers and completing documents online in the platform does three things for the SBA BDO. First, it allows the parties to quickly amass the information they need so that the SBA underwriter can make a loan determination. Second, because the SBA bank can make a quick determination and issue a letter of intent to the prospective borrower, the SBA loan originator can get the prospective borrower locked in and thus get the deal off the street. Third, document collaboration allows the borrower and the professionals supporting that borrower (including the SBA BDO) to work collectively as a team to get the documents completed. For the SBA BDO, quickly getting a letter of intent to the prospective borrower improves the SBA BDO’s chance of getting the borrower to lend from his bank. The Crimson eContracts platform allows the SBA BDO not only to share SBA Word forms to complete the initial underwriting process, it also allows the SBA BDO to share spreadsheet and presentations with the borrower and his team.

The SBA BDO loan origination market is competitive. Using a document collaboration tool to quickly and accurately complete SBA forms, SBA BDOs can greatly improve their chances of keeping and closing the deals they prospect.

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About the Author.

Nat James is a practicing North Carolina attorney in the Research Triangle Park area. Mr. James has drafted, negotiated, and closed business contracts for clients since 1992. This material represents his observations from past experiences. It is not intended to provide you legal advice nor does it create an attorney-client relationship between you and Mr. James. If you need legal assistance, seek independent legal counsel by contacting your State Bar or State Bar Association.