In part one of this two-part interview, Peter Downs, President of Business Lending at The Small Business Authority, shared about small-business lending and the ability of nonbank lenders like The Small Business Authority to accommodate small-business owners seeking loans.

Part two of the interview delves further into the small-business loan process, providing a glimpse at what applicants can expect as well as how The Small Business Authority’s unique relationship with community banks across the country comes into play.

Many business owners seeking loans may prefer to work directly with their community credit unions, because they’d prefer to support the little guy. What would you say to someone with that motivation?

Peter: We’re actually a unique nonbank lender—we have the best of both worlds because of our relationships with community credit unions, which can be rare with nonbank lenders. Because we take referrals from community credit unions, applicants can continue banking locally, continue cultivating relationships with local branch employees, and continue to track exactly where their deposits are landing nightly—all while reaping the benefits that come with a nonbank lender like The Small Business Authority. In essence, they get the comfort of local banking matched with the accessibility offered by a nonbank lender with an unburdened balance sheet. At this point, we’re working with more than 460 community credit unions nationwide, and it’s been proven to be mutually beneficial.

Why might a small-business owner experience a greater chance of success in securing financing with a nonbank lender like The Small Business Authority?

Peter: In contrast to the burdens other lenders have felt because of the residential and real estate effects, The Small Business Authority hasn’t been hurt by tarnished balance sheets. In addition, because we have the benefit of the U.S. Small Business Administration program behind us, and its 90 percent guarantee, we’re able to lend in a very broad manner as opposed to those who don’t participate in the U.S. Small Business Administration program. Because we’re able to lend under more flexible terms, our philosophy is to look at a lot of different types of businesses and industries that qualify under the U.S. Small Business Administration program, including startups and young companies as well as older companies. There are lots and lots of rules and regulations that U.S. Small Business Administration participants have to abide by, which is exactly why many lenders don’t participate. Because small-business lending is all we do, we’re experts in the U.S. Small Business Administration field and have the expertise it takes to make it work.

Tell me a bit about the lending process. What can a business owner expect once she has contacted The Small Business Authority to get the ball rolling?

Peter: Once a business owner contacts us, she’ll be assigned to a dedicated business service specialist whose sole focus is small-business lending. The first step is the pre-qualification assessment, which takes about 20 to 30 minutes over the phone. This is done to verify that the business owner is eligible to take advantage of the U.S. Small Business Administration program. During this phase, the specialist will pre-populate all of the necessary fields of the application documents. If together they discover that yes, they are indeed qualified and it’s worth the business owner’s time, effort, and energy to move forward, the assigned specialist will advance the application. All the applicant will then have to do is sign and return the paperwork with the supporting documents, and we take it from there.

Once the completed package is in the underwriting phase, the initial approval process takes five business days. We then add a closing specialist to the team to walk the applicant through the closing process, to ensure that all of the legal documents are in place. We then close it and fund it with a borrower. The nice thing about it is that each applicant will have one dedicated specialist to walk her through the entire process.

How many small-business loans did The Small Business Authority facilitate in 2009?

Peter: We did $20 million worth of U.S. Small Business Administration lending in 2009, and we’ll do about $50 million to $60 million in 2010.

We appreciate your time in not only providing a detailed overview of the state of business lending, but a closer look at how nonbank lenders fit into the equation. Thanks so much, Peter.

Peter: My pleasure. I’m happy to answer any additional questions that may pop up.

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So, here’s your chance. For anyone looking to initiate the process, or for anyone who may even be toying with the idea of growth via U.S. Small Business Administration lending, do you have any additional questions for Peter?

Is there anything we didn’t discuss during part one and part two that you’re curious about? Don’t be shy. Either shoot us an email at info@newtekone.com or drop your questions below in the comments section. We’d love to hear from you.