The Small Business Administration’s new Linc program is a computerized matchmaker that will make it easier for small businesses to find lenders and make it easier for lenders to find new customers.
From County Bank in Rehoboth Beach to Applied Bank in North Wilmington, the SBA is signing up lenders, including credit unions and nonprofit community funds.
Banks can input their own loan parameters and make the requirements as narrow as they like. The computer will send them email leads based on their criteria.
One glitch: It’s a buyer’s market. When borrowers get eight or nine bankers’ names, the bankers may feel they are wasting their time. If they know all their competitors are already working on the deal, they may not want to start working on it.
The advantage for banks: It generates free leads.
M&T Bank, which approved more SBA-backed loans than any other Delaware institution last year, sees the program as a way to reach new customers. So far, they’ve received five referrals.
The bank signed 39 SBA-backed loans this fiscal year, but most were with companies it already served. “This new program where borrowers are able to make contact with banks through the Internet is an opportunity to provide our services to people we wouldn’t normally see,” said Pat Ponzo, M&T’s vice president of business banking.
It’s a glove fit — M&T’s average SBA-backed loan is $125,000 or less, and the SBA currently waives its fees for loans under $150,000.
Rachel Baldini, director of lending for First State Community Loan Fund, said it’s a great free tool for her fund, a nonprofit that borrowers typically come to after they’ve talked to a bank.
“We’ve gotten quite a lot of referrals from the Linc system, which is great for us and it’s great for the borrower because they have a lot of options to see who would be best to work for them,” she said. “I’m sure it’s enabled us to reach people who have not heard about us before. Whether they use us or not, at least they know we’re out there.”
Darrell Stayman, senior commercial credit analyst at Applied Bank, checked off all Delaware counties on Linc, as well as the surrounding counties in New Jersey, Maryland, and Pennsylvania. He wanted to vet the leads, so he set his parameters wide.
He got 52 leads in about three weeks, and seven of them fit his needs.
“It does the job. It’s great for referrals. ” Stayman said. “One of the issues that we have is that there was one person we were really interested in, and, when we called him, we were actually the eighth bank that he ended up talking to. If this is what you always get for a bank, the bank is eventually going to stop using it. If you have a business-development manager, you want to use his time wisely.”
Stayman said he brought his concern to Delaware SBA Director John Fleming and to SBA National Administrator Maria Contreras-Sweet when she visited Wilmington last month, and they put him in touch with a staffer who is working on the problem.
He said Applied Bank’s relationship manager is already setting up a loan appointment with another prospective borrower matched through the Linc system.
Stayman hoped the program would be publicized more heavily in Delaware, because only two of his 51 leads were Delawareans.