SBA lending has returned to 2008 levels of activity and with this has come the need for new departmental staffing. Many new lenders have entered the program along with older lender programs being rejuvenated. Demand for those with SBA lending expertise is up significantly. SBA staffing has once again become a front burner challenge for management. The good news is – we know where to find the right talent. However, there is another major issue.
An estimated 25% of the SBA lending workforce lost their jobs at the beginning of the economic crisis that started in 2008. There was a 3 year gap before departments started hiring again. Between losing a quarter of the SBA workforce and little to no new hiring for 3 years, a serious issue was created. It has now become an employee market, driving up compensation across the board. To find the right fit for your team, be prepared to pay for it.
There are many variables that effect compensation. When asked to design SBA lender compensation for various staff positions, we must factor the following issues into the proper compensation.
- Type of lending institution (bank, non-bank, CDC, credit union). Each has a different business model that impacts compensation.
- Size of the loan program also has to be given consideration. A small lending program of less than $20 million annually will require staff with multiple skill sets that cover more aspects of the lending process. Larger lending programs can hire specialists who have a very narrow focus. So smaller programs will pay more for the talent, but less overall since they will have fewer staff.
- Age of the lending program can have a similar effect. A new program needs a higher level of expertise which can cost more. An older, established program can hire and train new talent costing much less.
- Your business model of selling loans or holding loans will impact the overall staffing budget. Those who sell loans tend to be willing to pay more for top loan producers.
- SBA staffing can be a supply and demand issue on a regional basis. Certain geographic markets are blessed to have an abundance of expertise while other markets have very little if any talent.
- Average loan size can be a determinate. The type of people needed and level of expertise can vary between lenders with a focus on loans under $350,000 vs larger loans. Low touch – high volume loan departments have a dramatically different workforce.
- Versatility of the employee, as mentioned above, can have a significant impact on salary requirements. The more skill sets, the more compensation.
- Incentive programs can have an impact as well. Some business models pay less base but more incentive on production. This is true even for SBA credit and SBA closers. A long term policy used by many SBA lending platforms, pay processing staff based on the number of loans processed each month. While this is usually a flat fee, it does allow for a lower base, and allows the employee to make more in the long term if they are diligent and efficient.