More than a decade ago, Money Store Inc. proved to skeptical bankers that there's plenty of money to made in Small Business Administration lending.

But in the past few years, Donald Coombe, the company's vice president in charge of small-business loan servicing, has taken the lesson one step further.

By cutting costs through automation and staff layoffs, he has shown banks and nonbanks alike what it means to run a lean yet highly productive small-business lending machine.

"Money Store pays me to go out and find the technology and implement it before our competitors do," Mr. Coombe said.

In the three years since Mr. Coombe joined the consumer lender, the small-business division cut its staff 40%, cut costs 30%, and doubled its loan volume to $678 million.

The company consolidated its underwriting and processing from 20 offices to one, replaced paper forms with a computerized imaging system, and introduced desktop faxing for document exchange.

"From a systems perspective, they are ahead of the game," said Tony Wilkinson, president of the National Association of Government Guaranteed Lenders.

Mr. Coombe predicts small business lending will eventually mirror residential mortgages, with increased credit scoring and securitization and more nonbank competitors.

"It never ends. You never sit down. You never stop looking for new technology," he said.

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