The weightings of the rating components depend on which lender peer group is being rated. For instance the past 12-month purchase rate is the heaviest weight for the larger volume lenders. However, the projected purchase rate is of more importance for the lower volume lenders.
The LRR (lender rating) includes SBPS data that comes from Consumer (TransUnion) and Business credit bureau reports (D&B), available for purchase by lenders and borrowers. The rating also includes SBA data that comes from the 1502 report (submitted monthly by the lender), and SBA entered data when lenders put loans in liquidation or request guaranty purchase.
The SBPS score breakdown is (the higher the score, the better the score):
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Lower Risk: SBPS Scores > 179
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Moderate Risk: SBPS Scores 140-179
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Higher Risk: SBPS Scores < 140
SBA tells us that as of 6/30/09 (this next quarter end), lenders will have access to individual loan scores so lenders will be able to compare their own credit scores (at time of origination) for a loan to how SBA has scored the loan. This additional information will be included in the lender portal quarterly reports. To date, SBA says that there is a 97-98% match, when comparing the two. Presently, the SBA’s scoring system only scores one of the business principals and they plan to expand their system to include multiple principals credit scores, because ETran already has the ability to obtain that type of information in the format needed (you might want to enter the principal with the highest credit score first into the loan application, in the meantime – every little bit helps on the portfolio rating)
SBA has compared a correlation between Lender Risk Ratings and actual performance results and feels very comfortable that their rating system is effective. For LRRs for calendar end 12/2008:
Rating Last 12 Month purchase rate (actual)
1 1.17%
2 1.70%
3 3.05%
4 6.30%
5 9.72%
In other words the more riskier the rating (highest rating), the higher the purchase rate is occurring.
You may want to do your own review of the L/LMS and other OCRM information at:
To obtain information on applying for access to the lender portal, go to:
One of the many services we at sbaAccess provide is assistance in interpreting lender portal ranking information and assisting with how to use the information once you start accessing it each quarter. It is part of a portfolio management process that each SBA lender should get into the habit of checking (and using). It may be as simple as accessing us through a Lender Lifeline (general consulting agreement – pay as you go) or you may want to arrange a short-end project, where we do executive consulting to help you walk through the report and make recommendations for incorporating it into your SBA Loan Procedures.
Take the Right Approach
Karen McHugh and Brian Burke
SBA Access ©2009 - All Rights Reserved
All content is copyrighted and unauthorized use is strictly prohibited. If you would like to quote any part of this text, email bburke@sbaaccess.com or kmchugh@sbaaccess.com for permission.
