Part of the challenge is making the choice to adapt to the types of loans Main Street needs. And you might be surprised to know that it’s not because they want too much, it’s because they don’t want enough.
Many of the small-business borrowers that get turned down at the bank, to the tune of thousands every week, visit Lendio looking for a small-business loan. Of them, 59 percent are looking for loans of $50,000 or less, far less than the average SBA 7(a) loan last year of $337,000. So far this year, the average is $379,274. Part of the reason is the cost associated with initiating and underwriting a smaller loan.
Who can blame a banker for ignoring the Main Street business owner who wants a $25,000 loan or a $50,000 loan when it’s just as costly to initiate and underwrite as a $500,000 loan? Traci Flynn at Holladay Bank & Trust, for starters.
Holladay Bank & Trust
In the spirit of full disclosure, Holladay Bank & Trust is one of the hundreds of small business lenders on the Lendio platform, but that’s not why I’m talking about it. I really believe it is trying to make access to capital a little easier for the small businesses in its community.
Holladay Bank doesn’t have a national footprint. In fact, it doesn't have branches all over the state, or even the city for that matter. Its focus is the Holladay community. It only has one branch, and it’s been that way for the last 40 years.
I recently spoke with Traci Flynn, a vice president at the bank, and asked what made the bank different. She said, “We work with a lot of small business owners who have good, healthy businesses, but aren’t perfect. They might not meet the restrictive standard of norms and requirements set by the bigger small business lenders in our area, but have proven to be great small business loan customers.”
When pressed a little further, she shared some of the criteria they use at Holladay Bank in addition to credit score, time in business, annual revenue and collateral.
Character and history
The last few years have been tough for everyone. When evaluating a potential loan, Flynn wants to know if the business has a good management team, is it current with its monthly obligations, does it have a good product, is it competing well within its market? Sometimes these indicators can mitigate a less than perfect credit history.
“With a good management team and some of these other factors in place, we can make a case to the lending board that the business is a good candidate for a loan,” she said. “Of course there is a credit score threshold we won’t go below, but we want to make sure we’re doing the best we can for all the small businesses in our community.”
It appreciates what it’s like to be a small business
“Although we do a lot of bigger small business loans, I’m just as happy to help the small business owner who is looking for $50,000. To a lot of the businesses in our community, that’s a big loan,” she said. “We understand what it’s like to be the little guy — in some respects, we’re the little guy too."
Holladay Bank understands the costs associated with smaller small-business loans, but it also understands the importance access to capital means to the business owners in its community. They’re making a long-term investment in Holladay.
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