SBA nears e-financing
- By Dan Caterinicchia, Dan Caterinicchia
- Jul 31, 2000
As part of its ongoing strategy to use information technology to improve
business decisions, the Small Business Administration is set to unveil an
electronic loan-guarantee system to streamline what is now a lengthy lending
SBA plans to use a World Wide Web-based system that uses built-in evaluation,
approval and servicing business rules to instantly process lender and borrower
information on the more than $50 billion in loans that SBA manages.
The automation enhances a paper-based workflow system and will streamline
the lending process to more quickly give funds to small, disadvantaged businesses
applying for the loans, said Kristine Marcy, SBA's chief operating officer.
"From a business standpoint, we want centralized and streamlined loan
activities and paperwork from all of our processing centers nationwide — no different than private industry," Marcy said.
SBA also will use the system to collect detailed information from lenders
to increase its oversight role and risk- management practices, said SBA
financial systems specialist Stephen Kucharski.
SBA plans to have the system operational for use by financial institutions
by late August. It has received $8 million in appropriations for the system
in the last three budgets and expects the same for fiscal 2001, Marcy said.
The total cost of the system is about $27 million.
Marcy said the agency has spent about two years planning for the loan
system to meet Clinger-Cohen Act requirements, such as precise planning,
and the SBA's reauthorization specifications, such as using IT to advance
The system is part of SBA's modernization effort, Marcy said. Phase
One of the program includes updating loan systems and loan oversight systems.
Phase Two, in the planning stage, focuses on internal management, including
the agency's core accounting and administrative systems. Phase Three will
focus on all remaining program activities, with planning scheduled to begin
Lawrence Barrett, chief information officer at SBA, said SBA outsourced
some of the system work, including software development, to small businesses.
SBA completed the system planning, he said.
Contemporary Technology Inc. and Aquas Inc., both small, minority-owned
businesses, are the prime contractors on the project. CTI, a recent graduate
of SBA's 8(a) program, specializes in mainframe development and Web enablement.
The Rockville, Md.-based company also served as SBA's key Year 2000 contractor,
said Kam Tse, CTI president.
"[SBA's] plan is to be Web-enabled, but first we had to help them get
their requirements together," Tse said. "We had to go through a rigorous
process of finalizing the requirements, and then we started on database
design and user- interface design."
Tse said the multiple-tier client/ server Web application features a
Sybase Inc. database server on Sun Microsystems Inc. computers, and the
development team chose Allaire Corp.'s Cold Fusion as the Web site development
application server. A Netscape Communications Corp. Enterprise Web server
will support Netscape Navigator and Microsoft Corp.'s Internet Explorer
for the end user. The system also uses Extensible Markup Language technology
to enable lenders to file transfer-loan applications.
"We wanted to use [off-the-shelf products] wherever we can in Phase
One because the requirements were not as well-defined as they are for financial
systems" in Phase Two, Barrett said.
SBA will also offer dial-up access for smaller or less active lenders
to encourage them to use electronic systems.
"We were very careful to communicate with lenders of all sizes in order
to help businesses who wouldn't get funding from other sources," Marcy said.
"And despite our effort to become electronic, we have done nothing to freeze
out the less technological lending institutions."
SBA has stayed in touch with lending institutions across the nation
via bimonthly chats with the technical staff members at two national lending
organizations: the National Association of Government Guaranteed Lenders
and the National Association of Development Companies, Kucharski said.