Bankers who work with the Small Business Administration hope that Maria Contreras-Sweet, President Obama's nominee to head the agency, will make some tweaks to improve the SBA's marketing to online and minority borrowers.
Contreras-Sweet is a community banker with experience lending to Latino and other minorities, groups that the SBA wants to target more aggressively. She founded, and is chairman, of the $148 million-asset ProAmérica Bank (PMRA) in Los Angeles, a minority owned bank that focuses on Hispanic groups.
A desired area of emphasis for many involved in SBA lending is making loans online, which would involve competing with a wave of online lenders that focus on small businesses. It is unclear if Contreras-Sweet backs online lending, or if ProAmérica has experience in that area.
Online lending "is absolutely a key piece" that Contreras-Sweet needs to work on if she is confirmed, says John Arensmeyer, chief executive of Small Business Majority, a San Francisco lobby for small business.
Contreras-Sweet and Bruce Mills, ProAmérica's president and CEO, did not return calls. The White House did not respond to requests for comments and additional information on Contreras-Sweet.
Contreras-Sweet was nominated on Jan. 15 to succeed Karen Mills, who announced her resignation in February 2013 after leading the SBA for about four years. Mills was commended for streamlining the process for approving disaster-loan applications and raising loan caps to expand lending.
Contreras-Sweet was born in Guadalajara, Mexico, and has an extensive background in business and politics. She founded the private-equity fund Fortius Holdings, which specialized in providing capital to small businesses. She has also served as secretary of the California Business, Transportation and Housing Agency.
Mills generally received positive reviews from bankers on her exit from the SBA. But many groups say the agency should catch up to a large group of firms involved in online lending, including Lendio in South Jordan, Utah, and OnDeck in New York. If nothing else, online lending can make the SBA application process easier and quicker for applicants.
"The more streamlined the [application] process, the easier and quicker we can get financing out to those in need," says Rick Sanborn, president and CEO of Seacoast Commerce Bank (SCCB) in San Diego. The $275 million-asset bank was ranked 11th in total SBA-approved loans, with $40 million, as of Dec. 31.
The SBA takes far too long to respond to loan applications, says Rohit Arora, CEO of Biz2Credit, which provides an online service pairing borrowers with lenders.
"There's a big disconnect between borrowers and banks right now," Arora says. "A lot more borrowers are going online. They want quick answers, instead of having to fill out reams of paperwork and wait a month-and-a-half to get an answer."
For many businesses, the SBA is their first choice for a loan because it offers superior rates and terms, as well as a sterling reputation, says Brock Blake, CEO of Lendio, which helps smaller banks make online loans. But the SBA has fallen far behind the technology curve, he says.
"They are years behind," Blake says. "They're losing a significant amount of business to online lenders."
An easy-to-implement upgrade would involve allowing electronic signatures on applications, says Dave Rader, head of SBA lending at Wells Fargo (WFC). "We would love to see online signatures, rather than the current requirements of having a wet signature or a signature in blue ink," he says.
Rader says he wants Contreras-Sweet to continue Mills' policy of expanding SBA lending, in terms of loan size and the range of borrowers eligible for guarantees. "We clearly want to help as many customers as we can and do more lending," he says.
Wells Fargo has worked with Contreras-Sweet on previous ventures, including Hispanas Organized for Political Equality, which promotes voter registration, education and economic development for Hispanic communities in California.
Contreras-Sweet founded ProAmérica, which lacks extensive experience in SBA lending. In the current fiscal year, which began Oct. 1, ProAmérica originated one SBA-guaranteed 7(a) loan valued at $252,000, according to the SBA.
In fiscal 2013, the bank originated nine SBA 7(a) loans, totaling about $2.7 million. That compared to 11 loans valued at about $7 million a year earlier.
Other community banks do far more SBA lending; a few devote at least half of their assets to SBA lending, including the $427 million-asset Live Oak Bancshares in Wilmington, N.C.
Despite questions about her experience with SBA lending, potential borrowers are generally upbeat about her nomination, Arensmeyer says.
"She comes in with a strong background in lending to the Latino community and with women's entrepreneurial issues," Arensmeyer says. "I think she can use those experiences and expand them to work in the SBA."