Anonymous Banker: Why Are S.B.A. Loans Disappearing?

"Anonymous Banker," who works for a major bank and so understandably wants to keep his identity secret, tells us why fewer S.B.A. loans are being made; what banks look for when making those loans; how, in spite of the government guarantee, they can be less than enthusiastic about making those loans; and who the top two 2007 S.B.A. lenders were.

By Joe Nocera, The New York Times Anonymous Banker, who is fast becoming Executive Suite’s new best friend, is back, this time with a first-hand explanation about why banks aren’t making small-business loans. A.B. — who, as I’ve mentioned in previous posts, works for a major bank but does not want to be identified — sent me this e-mail message a few days after a previous exposé, about the coming credit-card debt, was published here. I’ve come to think of these missives as eyewitness reports from inside the belly of the beast. By the way, we need to find a better pseudonym than Anonymous Banker. Any suggestions? As a business banker, I’m witnessing a tightening of credit throughout the industry. In recent months, I’ve seen a marked improvement in the supporting documentation banks are requiring when they review a loan, better processes to verify income and assets, and more stringent underwriting criteria over all. This is just as it should be. The banks could not continue their lax underwriting standards; they should never have used them in the first place. The change can be quite painful to small-business owners, and I find myself too often in the role of managing customers’ expectations. As an adviser, I often help clients source loans outside of the financial institution I work for. Different banks have different levels of appetite for various kinds of credit. And in this case, I’d like to focus on Small Business Administration loans.

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