Q&A: SBA official talks North Texas growth, loans, franchise changes

William Manger at Los Colinas Country Club

In the first three months of the fiscal year 2020, the U.S. Small Business Administration has already approved more than $239 million in loans to small businesses in the Dallas-Fort Worth area. The loan amount is on track to challenge or even beat the 2019 total of $1.17 billion.

Last year, small businesses in DFW received the highest amount of loan out of all the districts in SBA’s South Central Region, which incorporates Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

As a way to signify that distinction, the head of SBA’s Capital Access, William Manger, flew down from Washington D.C. to DFW on Jan. 15 to recognize some of the district’s top SBA-backed lenders in an award ceremony.

Manger manages the federal agency’s portfolio of over $120 billion in direct and guaranteed loans. Since being appointed as the associate administrator for the Office of Capital Access in 2017, Manger has led the overhaul of SBA’s loan program policy, technology and operations.

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Manger was a key proponent in SBA’s decision to extend its 504 loan program’s term from 20 years to 25 years. The changes went into effect in 2018.

The change to 25-years financing is believed to have improved small businesses’ cash flow and their ability to make larger capital investments.

Since the 504 loan program term addition, the number of DFW entrepreneurs to receive the loan has increased by 45%, while the area has seen a 100% increase in total loan dollar volume.

The Business Press sat down with Manger to learn more about SBA and its growing presence in DFW.

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FWBP: What is your relationship with the community-based lenders, banks like?

Manger: Most of our lenders, we actually give delegated authority to. That means, they can make the loans without a lot of extra communication with the SBA. But you have to be in good standing to do that. For those banks that maybe don’t do as many SBA loans and they want to send the package still into one of our [nine] centers around the country, you can do that. But what we’ve done in the last three years, we’ve cut the turn time in half. For example, a large loan–a $5 million loan– three years ago would take about two weeks to process. We can now do that in eight days. On a small loan – loans up to $350,000 – used to take about a week. We are now doing that in three days.

FWBP: Why should small businesses consider SBA loans instead of traditional bank loans?

Manger: We’ve sped up the process, which is something most consumers have been asking for. They want the products to be easier, simpler, more intuitive and faster. We’re competing against a lot of fintech companies that are giving out loans very quickly, but usually, the interest rate would be something like 45%. We’re providing banks with the ability to make loans at nominal interest rates. [For] the 504 loans, the interest rate now in the 4% range.

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FWBP: SBA just swore in its new administrator, Jovita Carranza this week. What can we expect from SBA going forward?

Manger: SBA started in the Eisenhower administration in the 50s. [Carranza] is the 26th one to come in. She has a very aggressive agenda to make sure that we do more in underserved markets. More for women, more for really struggling entrepreneurs. She wants to make sure we do everything we can.

What could be attracting small businesses to this region?

Manger: This area, in general, is booming. Texas as a state is booming. One of the reasons why it’s doing so well is you have lower taxes here, compared to some states that have much higher tax rates.

What’s something that you’re proud of so far in your time at SBA?

Manger: The way we’ve been able to cut back some of the regulations and really streamline the process and make it more efficient because it’s much easier to use now.

Any significant trends you’re observing with regards to SBA and small businesses?

Manger: We put all of the eligible franchise brands, the brands that can be used with a SBA loan, on our website. Previously, we didn’t have that. So, the bank had to determine whether a franchise was eligible, given SBA’s rules. When we first started putting them on the website, we had about 2,000 eligible brands. We now have over 4,000 eligible brands. And if you look at the trend in lending to franchises, it’s been increasing.

Historically, men would come in for franchises or couples would come in for franchises. In the last two years, we have seen an increase of 10% in women, on their own, coming in to start a franchise. That was not happening as much.