SBA declares success finding lenders for small businesses
By DENNIS GRUBAUGH
One year after the launch of a pilot program aimed at matching lenders with fledgling businesses, the Small Business Administration is declaring victory with its results in Illinois and elsewhere.
The program is known as LINC, for Leveraging Information and Networks to access Capital. It is a first-of-its-kind online borrower and lender matchmaking tool that helps small-business owners identify potential lenders in their communities.
It was launched in February 2015 as a pilot program to nonprofit lenders and more recently was made available to lenders nationwide. More than 700 lenders have been recruited to participate in LINC throughout all 50 states and U.S. territories, and more than 26,000 small businesses have been matched with at least one lender.
More than 1,000 Illinois small businesses have submitted inquiries through LINC since the tool launched in February and 91 percent of these small businesses were matched with at least one lender. There are 22 Illinois lenders participating in LINC.
SBA’s Midwest Regional Administrator Marianne Markowitz said the results have been gratifying.
“The whole thing was a bit of a surprise. We put it out there as a pilot. We were shocked at how quickly the lenders and the businesses gave us positive feedback and how immediate matches were happening. A 91 percent success rate is fantastic,” she told the Illinois Business Journal.
The program was rolled out in two phases, opening first to nonprofit, mission-driven lenders. SBA participates in two of those, the microloan program and the Community Advantage Program.
More recently, traditional, for-profit lenders were added.
“It’s grown exponentially,” Markowitz said. “And we’re definitely looking to grow this tool, both from a lender perspective and certainly the small-business perspective.”
For the entrepreneur the process involves answering 20 questions on line. That information is sent out to lenders that are doing business in the footprint involved.
“It doesn’t mean the credit happens but you’re very far along, once that match takes place,” Markowitz said.
There are instances where multiple lenders will show interest in a client. It means those businesses have more choices.
If lenders are interested in the referral and there appears to be a match with one of the loan products offered, the lender and prospective borrower’s contact information will be exchanged. Lenders are asked to respond within two days.
“The lenders love it,” Markowitz said. “It’s sort of a lead machine for them. For small businesses, half the work in getting a loan is the legwork — finding the right match for their credit story. This takes all the legwork out.”
During the first phase of the rollout, the mission-driven lenders were almost immediately reporting back on how much LINC was helping grow their business, she said.
SBA will next look at how it can grow the concept, for example seeing how LINC could be modified to facilitate government contracting by connecting businesses with procurement officers, prime contractors and federal buyers.
“It has a lot of potential,” Markowitz said of the concept. “(Government contract work) also takes a lot of legwork. It’s not just submitting a bid.”
SBA has pledged not to overlook companies that do not get lending matches.
“For those businesses, we are doing a soft handoff to our counselors to make sure that they get the right advice on getting their credit story and business story in order so they are more credit worthy and bankable,” Markowitz said.
SBA works with a number of resource partners, including agencies like SCORE, which it funds, and Small Business Development Centers like the one at Southern Illinois University Edwardsville. Those agencies provide free business counseling to anyone interested.
LINC is a product of a strategic initiative within the SBA that began with the arrival two years ago of agency administrator Maria Contreras-Sweet, whose mantra was making SBA stand for Smarter, Bolder, Accessible.
“LINC is an outgrowth of being smarter and more accessible,” Markowitz said. “This came about pretty quickly after we started focusing on those three areas.”
The program is one means of avoiding predatory lending, which SBA says is a problem that’s worse in urban areas.
“Chicago has seen an uptick,” she said. “All business should be on the lookout. We hope LINC is a tool to finding legitimate lenders. Business have to be very careful dealing with these ‘easy’ loans that are out there on line. Sit back and do the math, they are paying incredible interest rates.”
Information about the program can be found at SBA.gov.
Here is a list of Illinois lenders engaged with LINC. Six are considered non-traditional lenders (identified by asterisk).
*Accion Chicago, Inc., Chicago
Busey Bank, Champaign
*CenterPoint 504, Inc., University Park, Governors State University
First American Bank, Elk Grove Village
First Clover Leaf Bank, Edwardsville
First Federal Savings Bank of Champaign-Urbana, Champaign
First Mid-Illinois Bank & Trust, N.A., Mattoon
Heartland Bank and Trust Co., Bloomington
*Illinois Business Financial Services, Peoria
Jersey State Bank, Jerseyville
JPMorgan Chase Bank, Chicago
Marquette Bank, Chicago
MidCountry Bank, Marion
Park Ridge Community Bank, Park Ridge
Peoples National Bank, McLeansboro
Rockford Bank and Trust Co., Rockford
*Rockford Local Development Corp., Rockford
*Small Business Growth Corporation, Springfield
*SomerCor 504, Inc., Chicago
State Bank, Freeport
Town and Country Bank, Springfield
Village Bank and Trust, Arlington Heights