The SBA lacks the infrastructure to efficiently process the $350 billion capital allotment it received from the recent $2 trillion economic stimulus plan (read our breakdown here).
The SBA’s loan origination Website is overwhelmed from a bandwidth standpoint. The SBA’s Website regularly times out or crashes before providing loan origination IDs to bank partners. It regularly takes banks 30 minutes or more to submit the required information for a single loan request through the SBA’s Website.
Why not pair the SBA with an experienced FinTech provider? A better approach would have been to pair the SBA with FIS (tkr: FIS), Fiserv (tkr: FISV), Jack Henry (tkr: JKHY) or SS&C Technologies (tkr: SSNC) to ensure that an experienced hand with deep technology roots was at the wheel.
Short processing windows drive inefficiency. The SBA initially mandated that banks extend loans within five days of receiving funds. This has been extended to 20 days so that banks may be more careful around recording and storing the necessary loan information.
$250 billion in next SBA loan tranche. Another $250 billion in SBA loans potentially coming down the pike as part of the $2-plus trillion stimulus package that is being debated.
It pays to have diverse revenue streams and a scalable operating model. We expect that small businesses that re-configure their operations to leverage e-commerce, delivery, in-store pick-up, drive-thru and the like will receive more favorable loan terms than comparable businesses that are heavily-weighted to in-store sales. Think of restaurants for example. Those that have attached market operations with online ordering/fulfillment capability are viewed as far less risky as compared to those restaurants that exclusively rely upon table turns.