New SBA system to scrutinize loan risk

The Small Business Administration this week contracted with two financial vendors to strengthen its lender oversight, which the General Accounting Office had criticized in December for insufficient resources and independence.

SBA awarded a five-year, $9.8 million contract to Dunn & Bradstreet Corp. of Short Hills, N.J., and Fair Isaac Corp. of San Rafael, Calif., to build a loan-risk monitoring system. SBA currently collects and analyzes lender information in-house.

"The new system will give us more information than we ever had before," said Janet Tasker, associate administrator for lender oversight. "We will be able to see where the loans are going and what the risk profile is by industry, geography or SBA program."

The new system will obtain SBA loan information from lenders, match it with Dunn & Bradstreet's commercial database, and run it through a scoring model developed by Fair Isaac. The model will analyze SBA's 7(a) and 504 loans, which account for about 85 percent of the agency's $114 billion loan portfolio, Tasker said.

"Fair Isaac's scoring model is the industry standard," Tasker said. "It predicts the probability of default. We have used it before for our LowDoc loans."

Information from the new system will set a baseline for loan performance so that SBA can make changes where needed to its loan programs, based on the lenders' success rates.

Dunn & Bradstreet and Fair Isaac must deliver a workable model by mid-June and have a finished product by Sept. 30.

"As this office has evolved over time, we felt we needed more information to assess how well lenders are doing and the quality of our portfolio," Tasker said.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here


  • VIDEO: Explore the 2019 M&A Trends

    Editor Nick Wakeman interviews Kevin DeSanto of the investment bank KippsDeSanto about the highlights of their annual M&A survey and trends driving acquisitions in the federal space. Read More


    In our latest Project 38 Podcast, editor Nick Wakeman and senior staff writer Ross Wilkers discuss the major news events so far in 2019 and what major trends are on the horizon. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.