Much to the surprise of many, it wasn’t carcinogens in toast that did away with your free toasters for “banking with us.” Equally it wasn’t the influence of secular society that did away with your Christmas Club. It was the proliferation of the Loan Production Office (LPO).
Typically institutions identify markets that they want to enter — and their only goal may be to seek lending opportunities. Others market entries may ultimately result in full service banking facilities. Frequently, in my SBA lending career, I’ve been planted in an LPO.
Borrowers used to the traditional lending construct often have a difficult time coming to grips with the LPO concept. Many find comfort in the bricks and mortar concept of a bank. They like to be able to walk in and see their teller and their banker behind his desk.
I empathize with borrowers who have puzzled reactions when they ask about my office location, and my response is “In my third bedroom.” Or for those that really know me — Starbuck’s!
So for those borrowers and consultants out there: news flash
— you don’t need to be in a state with a charter. Many community banks simply state in their strategic plan to the Federal Reserve that they are a national SBA lending platform — which justifies their expansion beyond their city and state.
That being said, it isn’t unheard of for the Fed to tell an institution to open a branch in a market in which they started with an LPO, but made so many loans that the Fed felt it necessary for the bank to have a bricks and mortar presence. (Shout out to my former manager Robert Flores presently with Seacoast Commerce Bank. It happened to him and they had to open a retail branch — on the back side of a high rise office building, facing the parking garage. Really! I’ve been there!)
Now to my friends in the banking industry an LPO lender can be a win for you too. I explain to lenders that LPO’s can also stand for Limited Product Offerings. I can’t even offer my borrowers a Christmas Club account! So, I’m a collaborator not a competitor! Often, in this environment, all I am looking for is one thing: the SBA loan.
And whenever you are in need of a jolt of caffeine we can meet up at the office to go over your deal.
Namaste … bud.
Not All SBA Lenders Are Created Equal.