The Small Business Administration (SBA) is getting into the matchmaking business with the nationwide launch of a new online referral tool it’s hoping will catch on with its lenders.
In February, the SBA launched the LINC tool, short for Leveraging Information and Networks to Access Capital, to a select handful of nonprofit SBA lenders. Then in early May, SBA Administrator Maria Contreras-Sweet announced the administration would be expanding the program to all SBA lenders.
“We’re trying to help small business owners access capital. Technology now allows us to set up this online matchmaking service where we can hopefully pair up the lenders and the borrowers, just by using their computers. Back in the day, you had to go door to door and you probably had a lot of doors closed in your face,” said Anne Hunt, the SBA’s deputy district director in Massachusetts.
Here’s how it works: Potential borrowers or would-be entrepreneurs can access LINC from the SBA’s website and fill out a short questionnaire outlining the nature of their business and their financing needs. LINC then forwards that information along to participating lenders in that borrower’s county. Lenders who might be interested in making that loan or connecting with that borrower can then reach out by phone or email, depending on how much contact information the borrower has chosen to provide.
“The SBA is really just trying to help easily match up borrowers and banks,” she said. “The agency spent months surveying our lenders to ask what kind information they would need, what kind of questions borrowers should answer.”
South Eastern Economic Development Corp. in Taunton (also known as SEED Corp.) was among the first to participate in the SBA’s LINC pilot.
As a certified development company, SEED Corp. acts as an intermediary lender through the SBA. Sometimes a business owner or entrepreneur who approaches SEED Corp. isn’t exactly a match, but the CDC can nonetheless point him or her in the right direction.
And in that respect, the SBA’s new LINC tool is a nice complement to SEED’s mission, said Angela Knight, SEED Corp.’s marketing and business assistance officer.
“If we cannot financially assist the small business at this time, we at least have the connections and we know what resources are available to help get them on the right track,” she said.
While the LINC tool is still in its infancy, Knight said that SEED Corp. has already made one small business loan through the referral tool. She estimates that she’s emailed about 60 borrowers referred to SEED Corp. through the LINC tool and about 13 of those have sounded like potentially viable clients.
“It allows us to have a little bit more visibility. They may not have known to turn to us at all,” she said. “The biggest disconnect with small businesses is they don’t always know what resources are available to them.”
More recently, Eastern Bank and Cape Cod Five Cents Savings Bank have also signed up to use LINC.
“We saw this as a neat way on the SBA’s part to make it a little bit easier for prospective borrowers and entrepreneurs to get an early stage dialogue with numerous lenders and put us in touch with folks who might be looking to expand their business in our market area,” said Robert Talerman, Cape Cod Five’s executive vice president in charge of lending.
Talerman said Cape Cod Five hasn’t yet made any loans through LINC, but he said he’s had some promising conversations, and it’s early yet.
“It’s still very early, but I think it’s fair to say that we’ve had, as a result of the tool, some conversations with folks we might not have spoken with otherwise,” he said. “The feedback from those conversations is clearly that the tool opens up conversations with multiple lenders who are signed up. It helps these prospective borrowers and entrepreneurs to make a bunch of connections and talk about the process early on, and in turn should help them be better prepared.”
Eastern Bank, meanwhile, has already made a few loans to borrowers who connected with the bank via LINC.
“It’s very intuitive. You click a button, you get an email message. The follow-up is very quick,” said Charles Smith, senior vice president and SBA specialist at Eastern Bank. “Some of these have turned into deals, and some have not, but that’s the nature of any referral source.”
Andrew Foss, a commercial loan officer at Cape Cod Five, commented, “It really streamlines information from the prospective borrower to potentially a bunch of different lenders, and it’s a very efficient process – the lender will get an email and can follow up right away with a potential customer.”
