A Letter from John D. Evans

May 6, 2021

To Our Valued Lending Partners,

On behalf of Mountain West Small Business Finance, I would like to express our appreciation to you for helping us assist record numbers of small businesses through the SBA 504 Program. The table below illustrates the increased 504 volume at MWSBF (FYE: 9/30):

	FY 2019	FY 2020	% Chg.	2020 (6 mos.)	2021 (6 mos.)	% Chg.
# of Loans	189	233	23.3%	100	170	70%
Loan Dollars (000s omitted)	$133,848	$169,530	26.7%	$85,182	$131,019	53.8%

MWSBF is currently ranked as the fifth leading CDC lender in the country (190+ CDCs), behind only those in New York, Florida, and California. While figures are not currently available, we should rank much higher on 504 loans made, per capita.

This past year has been challenging in many ways. The COVID-19 pandemic has resulted in complex Congressional relief efforts and distressed loan portfolios. Ironically, at the same time, we have also had a generally strong economy and historically low interest rates, both of which have fueled overwhelming 504 demand. As a result, SBA and MWSBF turn times have slowed and staff resources have been strained. Pending regulations on Debt Refinance and increased delegated authority on smaller loans, should create additional 504 demand.

In recent months, the SBA Processing Center volume has doubled. Although we have a good relationship with the SBA, this situation has put immense pressure on the Center such that we are unable to ask for expedited responses. This can be frustrating for all parties, especially when the SBA, on occasion, gives unforeseen adverse responses or questions, which can further lengthen turn times.

Please know that we are mindful of the stress that this situation has caused for you and for our borrowers and that we are actively working on solutions.

So, what are we doing?

We are hiring and training more employees in the loan processing, underwriting, and closing functions. This will shorten the time to internal and SBA approval and expedite closings.

Drawing on our own experience, and on that of other CDCs around the country, we are adapting and improving our internal processes to create greater efficiencies, such as the creation of master checklists, and borrower questionnaires, the realignment of the processing and underwriting functions, etc.

We are working to reduce SBA screen outs, through greater specialization of labor in loan processing, underwriter training, and the implementation of pre-SBA submission reviews.

Upon issuance of Authorizations, the loan officers will review them with the borrowers and lending partners to ensure that all terms are understood and a smooth closing process.

We will be placing greater scrutiny on start-ups and projection-based loans, both of which require much more time and bring greater risk of screen outs/declines (longer turns). Many of these loans will first be directed to Small Business Development Centers, for assistance with the projections.

The MWSBF Loan Officers are not compensated on an individual loan-by-loan commission basis , nor are they restricted to lending in specific geographic areas; therefore, it is perfectly acceptable to work with an officer in a different office, who may not be as busy. These internal referrals can be made by your local loan officer, Danny Mangum (COO), or by me. Loan applications or inquiries can also be initiated through our website, both of which come directly to me for assignment.

What can you do?

Please have the borrowers provide complete 504 loan applications. These applications will be given priority because they answer most of the SBA’s questions and enable our underwriters to quickly process applications with fewer touches.

Please loop us in early, prior to finishing your internal loan underwriting/approval process. This will help us avoid unnecessary delays.

Please facilitate communication between MWSBF and the borrower, to reduce confusion.

Please manage borrower expectations regarding turn times, when determining settlement deadlines. Please discuss this with our loan officer early in the process. We are especially appreciative of our lenders who understand these challenges and who work with us to find solutions for stressed borrowers with tight deadlines.

We would ask for your help to always show respectful language and attitudes towards MWSBF staff as they are working very hard under very difficult circumstances. We know these longer processing times are frustrating. We are especially appreciative of our lenders and borrowers who have chosen to embrace civility, despite these challenges.

Again, I thank you for your continued support of MWSBF and of the 504 Program. Please do not hesitate to reach out to me with any questions, concerns, or suggestions on how we can better serve you and our mutual borrowers.

Sincerely,