The Great Resignation applies to SBA lenders as well
A buyer of one of our recent engagements informed me they will be using a prominent SBA lending institution that they’ve had a strong banking relationship with for years.
In fact, this lender is a Preferred Lending Partner (PLP) and does a fair amount of SBA lending in our state.
They were chosen to provide a 7(a) loan on a small business acquisition of ours just North of $2 Million that included commercial real estate.
After five months into the process, the Business Development Officer (BDO) of this bank decided to jump ship like the rest of the crew in the organization.
Many of these bank employees spent years with the organization and then one-by-one they systematically left the organization in a relatively short time frame.
I would imagine if you asked them why they jumped ship, they would tell you something like they didn’t feel appreciated, the timing was right for them, and they were ready for a new adventure. Oh, and the pay raise is nothing to complain about.
Unfortunately, they left the bank and all parties involved in the transaction in a mess to sort out and could have killed the transaction.
It put a lot of stress on our sellers, the buyers, and all the advisors in the acquisition. Our sellers were upset, they spent extra money expediting financials for this lender, and it hampered the plans and timing for all parties involved.
How difficult would it have been for the team to hang in there just a little longer before jumping ship and leaving us all in a bind?
Fortunately for all of us, in this instance, we were able to find a strong lender for the buyer with an eager and talented team to resuscitate this transaction and we should close the deal in record time.
The lender has set a target closing date for 35 days from the time the buyers completed the new lender’s loan application and financial projections.
We are further along after two weeks with this new lender than we were with the flailing lender after five months!
Now, more than ever, it’s difficult for banks to find employees that are loyal and committed to them.
Employees may realize later down the road however that it’s not always “greener on the other side”.
The new employer may not manage business acquisitions at all, or if they do, may not have the PLP accreditation, so transactions may take up to a month longer than they and their strategic partners were accustomed to, may experience different credit policies, etc.
The simple fact is, not all SBA lenders are created equal. Some have the leadership team in place to hire top-notch talent and the ability to keep them engaged and happy. This of course creates a low turnover which is needed with SBA lenders today.
What does the future hold?
Since COVID-19, there has been a great shift in SBA lending employment with BDOs and Underwriters at many banks here in Colorado that our organization works with.
One BDO mentioned recently that he will never leave a bank for money but will leave due to bad management.
Employees at the lending institutions like everywhere else want to find the right culture fit.
Peter Drucker once wrote, “culture eats strategy for breakfast”.
As if it wasn’t difficult enough to find good BDOs but now the demand for experienced underwriters is high and it’s extremely difficult to find experienced underwriters with all the business acquisition activity.
SBA lenders are also receiving support from the conventional team at the bank to support the SBA team, as well as hiring a younger crowd of inexperienced underwriters that show promise and spend many hours bringing them up to speed.
These younger underwriters are also more willing to work longer hours and weekends as needed.
With the “Silver Tsunami” of aging Baby Boomers ready for retirement, and qualified buyers coming out of the woodwork, the demand for SBA lender employees should only become greater.