John Fisk is on a mission to bring mortgage market efficiency to small-business lending on the Internet.

After 17 years with Freddie Mac, Mr. Fisk left his post as head of its single-family securitization group at the turn of the year to start

The small-business loan market is "years behind," the mortgage market, Mr. Fisk said. "I view this as an opportunity to take everything I know about mortgages and apply it to a market that is ripe for redesign."

Also, he said, "I always enjoyed building things from scratch." is in the "seed stage" of development, he said, and is funded through capital from Potomac Ventures, a Washington-based venture capital firm. The company plans to use the Internet to take on-line applications and streamline the underwriting process. It hopes to be doing electronic closings within a year, Mr. Fisk said, and to gain 250,000 customers within the next few years. He said loan sizes will range from $100,000 to $1 million.

He said the small-business loan market has "a lot of the same high cost structures" as the mortgage market. will look for borrowers through the Internet and approach them through direct mail and telemarketing he said. Borrowers will probably be "traditional businesses," he said, such as hotels, motels, gas stations, and medical practitioners, in addition to some high-tech companies.

Mr. Fisk said his new company plans to tap the capital markets even though "there is not a liquid market at all," for small-business loans that are made outside the parameters of Small Business Administration guidelines. He said wants "to bring homogeneity to this market and create liquidity where there isn't any now." does not plan to become an SBA lender, he said.

Small Business Administration loans have guaranteed and non-guaranteed portions. A secondary market for the guaranteed portion has existed for some time and accounts for the bulk of the securitization business. In 1999 secondary market sales of SBA-guaranteed loans totaled $3.4 billion, representing less than half of SBA loan volume.

The nonguaranteed portions were first securitized in 1992, and since then have accounted for only $1.5 billion in securitizations. Though this market is small, it is "just beginning to grow," in part because of "the desire for a cheaper source of funds by those lenders that don't have an adequate deposit base, or by those nonbank lenders that don't have a deposit base," said James W. Hammersley, director of the secondary market program for the SBA.

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