Event Recap: NAGGL 2020 Annual Conference
The most prominent highlight of the Conference were the changes to the Small Business Administration (SBA) fee structure for the Export Working Capital Programs (EWCP). The previous fee structure made loans with greater than one year maturity cost prohibitive. The guaranty for a 3-year EWCP line of credit is now 0.8%, down from 3.0%-3.75%.
Several technical changes were also highlighted. For example, all export programs are now in one section so it’s easier for lenders to determine what’s best for a customer while adhering to SBA’s guidelines. The SBA also continues to add flexibility in how customers may use their loans.
The focus of the presentation I gave was to help other lenders understand how SBA export loans are like other SBA lending programs, the difference being an emphasis on exporting businesses. As one of only 20 banks in the U.S. that participates in every SBA program, we feel it’s our responsibility to educate other lenders on the benefits of all available loan programs to help create a broader, more diverse lending community for small businesses and borrowers.
One specific concern that came up was the SBA’s “credit elsewhere” test, which effectively requires a bank to demonstrate eligibility by showing that conventional financing is unavailable. Part of this proof requires assessing a borrower’s liquidity which includes not only a business’s working capital, but also the assets of the owners, their spouses and minor children. As a result, things like college savings accounts or a recent payment on a large order that needs to be reinvested back into raw materials and supplies can make a borrower look like they can qualify for a traditional loan. As the lender, we then must explain to the SBA why SBA funding is key to the ongoing growth of the borrower’s business. Removing this onerous standard demonstrates the value of our active participation in NAGGL.
Overall, the conference was another example of NAGGL’s value and importance to SBA lenders like us. Initially, we joined NAGGL because of their strong SBA training programs and the up-to-date information they provide on changes to loan programs that we need to be aware of. Attending NAGGL conferences and classes helps us stay informed and fine-tune our expertise, understand best practices from other banks, and use SBA’s program more effectively to provide our customers with more options.
Over time we have also discovered that NAGGL’s advocacy on behalf of small business in general is a crucial organizational benefit. They have helped us to communicate directly with SBA executives, made introductions to staffers on Congressional small business committees, and afforded us the opportunity to present to Congress on ways to improve SBA programs for both banks and borrowers, including advocating for the EWCP fee structure change.
With luck, we hope next year’s 2021 Annual Conference will be in person. Until then, stay well.
Disclosures
Guaranty Rates listed in this article are subject to change at any time. For the most up-to-date information, visit the Small Business Administration.