The days of faxing in mountains of documents and face-to-face meetings with lending officers may be coming to an end.
That's one of the predictions SBA Administrator Maria Contreras-Sweet shared during a June 11 online session titled the "Future of Lending," presented by Washington newspaper Politico and the Independent Community Bankers of America.
A growing number of small business owners are more nimble with technology and often expect others they work with, including government agencies such as the SBA, to be just as deft, Contreras-Sweet said during the session attended by CU Times.
"My son is here. If I say to him 'if you want to start a business, you have to go stand in line at a center.' But he might say, 'well, I'm used to seeing things on YouTube,'" she illustrated. "We must understand where the population is going. We have to make sure we're as nimble as small businesses."
To that end, the SBA is using technology more to market and communicate about the agency's programs in a virtual way, Contreras-Sweet said.
"Financing looks different these days. Now, people are swiping into their mobile phones to make deposits and using things like Square. There's interaction with bitcoins. We, as a regulator, have to stay current," she said.
The increase in minorities and women who are starting their own businesses will also change the future of lending, Contreras-Sweet said. SBA lending to African Americans was up 29% over the last year and, citing data from the Urban Institute, women and minorities are three to five times more likely to be approved for an SBA-backed loan than a traditional loan.
Still, one of the session's moderators noted that it is still difficult for minority business owners to get loans compared to their counterparts. Contreras-Sweet said it's critical to look at other factors during the application process.
She pointed to the SBA's announcement last week about its new credit score that will combine an entrepreneur's personal and business credit scores for loans under $350,000. The goal here is to look more at risk characteristics, rather than socio-economic factors, to determine if a potential borrower is creditworthy, she added.
The SBA, Contreras-Sweet said, is also encouraging more microloans with community banks and community development financial institutions through its Community Advantage program. After a track record is established, minorities can then transfer over to a traditional bank or credit union loan.
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