Finding Efficiencies and Profitability in Small Business Lending

Session Recap

Small Business Lending

Session Summary from the 2023 ABA Annual Conference

The session, titled "Finding Efficiencies and Profitability in Small Business Lending," featured a distinguished panel discussing the challenges and opportunities in supporting small and medium-sized businesses (SMBs) through effective lending. The session was moderated by Russell Davis, the Executive Vice President of the American Bankers Association (ABA), and included insights from three panelists: Christopher Richards, Chief Banking Services Officer at Cape Cod 5 Bank, Benjamin Wallace, Chief Executive Officer of Summit Technology Group, and Loughlin Cleary, President of Lenders Cooperative.

The discussion began by acknowledging the vital role SMBs play in local communities and economies, emphasizing the need for accessible capital, especially during economic uncertainty. Small businesses often seek a personal and responsive relationship with their banks, which poses a unique challenge for traditional lenders. The key question posed was, "What are the challenges and opportunities in the small business lending market from the perspective of bankers?"

The panelists highlighted several critical challenges that bankers face in small business and Small Business Administration (SBA) lending:

  • Lack of Technology: Many community and regional banks struggle with limited resources, making it challenging to afford the technology required for efficient lending processes.
  • Profitable Scalability: Scaling small business lending profitably is a significant hurdle, as the lower loan amounts and the time-intensive underwriting process can erode profitability.
  • Talent Shortage: Finding the necessary talent with the expertise to evaluate small business loan applications is a common obstacle for banks.
  • Risk Aversion: Bankers sometimes shy away from small business lending due to the perception that it carries higher risk compared to larger commercial loans.

Lenders Cooperative was presented as a solution to address these challenges. The organization is dedicated to implementing end-to-end small business and SBA lending technology without upfront setup costs. They emphasize the importance of "scored" small business lending, which allows for more efficient and profitable lending, making it competitive with alternative lenders. Lending driven off a score, can help banks overcome the unique challenges associated with underwriting small business loans, ultimately allowing for faster and more effective lending decisions, while properly managing risk.

Furthermore, Lenders Cooperative highlights the potential of combining high-touch customer service with cutting-edge technology. By accessing pools of subject-matter experts, banks can offer small business and SBA lending profitably without the need for significant staff expansion.

The session concluded with the announcement that Lenders Cooperative is partnering with the American Bankers Association (ABA) to provide a solution. As an ABA Premier Associate Member, Lenders Cooperative offers ABA members significant savings on their Small Business Loan Origination System (LOS) with Turnkey Back Office Labor. This partnership aims to empower banks to better serve their local SMBs and enhance the efficiency and profitability of their small business lending operations.

To learn more - reach out to Loughlin Cleary at