How fintech gave this SBA lender an edge

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Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast's community banking executive.

“Speed to delivery is crucial to any small business,” Kleffel said. “Customers live very busy lives. ... This takes some of the tedium and stress out of the process.”

Seacoast, which became a SmartBiz client late last year, booked $700,000 of gains from selling SBA loans in the first quarter, tripling what it reported a quarter earlier and surpassing its total for all of 2017 by 40%.

Kleffel, who said loans generated through SmartBiz hit 127% of targeted volume in the first quarter, predicted that the effort should allow Seacoast to become one of the SBA's top 100 7(a) lenders for the fiscal year that ends on Sept. 30. To do so, Seacoast would likely have to increase year-over-year 7(a) originations by more than 60%, according to SBA data.

Partnerships like the one between Seacoast and SmartBiz provide more proof community banks can gain an edge when paired with new technology, industry experts said.

“Community banks are going to win the fintech battle,” said Robert Giltner, chairman of RCGiltner Services, a firm that markets a small-business lending product. “First and foremost, they already have the customers. They bank all these small businesses. They just don’t have the loans. … Digital [technology] puts them back in the game.”

“If community banks can be nimble and respond and adapt some of these technologies, that’s a win-win,” said Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America.

“They can leverage innovation with the relationships that clients, especially small-business clients, desire," Rainey added. "Small-business entrepreneurs want to be able to call a banker and get advice. Community banks can do that.”

After a slow start, more community banks seem to be warming up to fintech solutions for small-business lending. In a May survey of 440 community bankers conducted by the American Bankers Association, 71% said they planned to introduce a digital small-business product in the next 12 months.

Fintech products could prove particularly helpful when it comes to making smaller loans.

MinuteLender, the product offered by RCGiltner Services, uses credit scores and data from an applicant's checking account to help banks underwrite small-business loans of $100,000 or less.

SmartBiz, which focuses on SBA 7(a) loans of $350,000 or less, has facilitated more than $500 million of loans since it was founded in 2009. Its online portal routes applications to the participating bank that is best suited to make a loan. It also automates its bank clients’ underwriting and packaging, accelerating the application process and reducing processing costs.

SmartBiz has doubled the number of bank clients over the past year; Seacoast was the eighth bank to sign up.

“Our business is certainly accelerating,” SmartBiz CEO Evan Singer said. “We're adding more banks to the platform, so it’s been a good year.”

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Fintech Community banking Growth strategies Small business lending SBA Florida