Meeting the government’s high standards is no small task for SBA lenders
Chicago-based Byline Bank is the nation’s second largest Small Business Association (SBA) lender, with close to $1 billion in assets. To realize this success, Byline Bank has had to navigate a substantial amount of risk. After all, SBA lenders primarily work with many startups and early stage small businesses, who often are newer borrowers.
SBA loans are backed by a government guarantee, which grants lenders a degree of security when doling out riskier small business loans. The tradeoff? Increased government scrutiny and additional paperwork. Given Byline Bank is also a preferred SBA lender and can issue guarantees on behalf of the SBA, they face even more granular inspections from the Small Business Administration.
“We have to comply with government requirements in order to protect the government-backed guarantee,” said Laima Lohman, Senior Vice President and SBC Closing Operations Manager at Byline Bank. “On a day to day basis, the list of documentation that we ask our clients to provide, and the level of due diligence they have to adhere to, is very cumbersome and complicated. If a loan goes bad and we have to submit it to be repurchased by the SBA, they’ll scrutinize the loan, the documentation, the underwriting, the closing, and the funding part of it before they honor the guarantee.”
Byline Bank needed a partner that could offer a more extensive view of a potential borrower’s financial health, easing the burden associated with the rigorous due diligence that comes along with SBA loans. Along with finding an underwriting solution that could facilitate a more thorough risk assessment process, Byline Bank valued speed and flexibility. They wanted to be able to anticipate more successful loan outcomes while providing clients with fast, consistent turnaround times.
Top-notch customer support and same-day tax transcripts streamline the SBA lending process
Byline Bank turned to Tax Guard to provide tax debt reporting and tax transcript returns for SBA loans. Initially, Tax Guard’s big selling point was our ability to complete same-day tax transcript requests. At first, Lohman thought this was too good to be true. “I didn’t even believe them,” she said, “but I gave them a trial and they delivered.”
In 2022, the Internal Revenue Service (IRS) only answered 10% of taxpayer phone calls, and callers spent an average of half an hour on hold with the agency. Tax Guard’s rapid turnaround time and attentive, high-touch customer service has eliminated Byline Bank’s need to constantly call the IRS, saving bank employees substantial time.
“When you call the IRS, you’re on hold, then on hold again, and two hours later, you might have an answer,” said Lohman. “Tax Guard eliminated all of that.”
Lohman found that TaxGuard offered more comprehensive, flexible support than Byline Bank’s other providers. “The concern my teams had [with these other providers] is the sensitivity to forms and how they are completed,” she said. “If we missed a comma or a period, the form would get rejected. If we didn’t fill something in, the form would get rejected. Tax Guard is so much more integrated, and their responsiveness is beyond compare.”
With more than 15 years of experience, Tax Guard provides detail-oriented, actionable feedback at every step of the complicated SBA lending process. The IRS doesn’t provide lenders with a reason that explains why a form was rejected. Pouring over paperwork in an attempt to find one or two small, easily overlooked errors can substantially slow down a bank’s workflow and makes it difficult to get small businesses the working capital they need. Tax Guard is very familiar with the common mistakes that can stop a transcript request in its tracks, and is prepared to quickly find errors and suggest how to correct them so clients can turn rejection into an approval as soon as possible.
Make better, faster lending decisions and grow a great reputation
With Tax Guard’s assistance, Byline Bank is closing more loans and lending with more confidence than ever before.
“Having faster access to those transcripts, ultimately helps us to close more deals,” said Lohman. “Another big advantage for Tax Guard is its unique ability to reveal tax liabilities before any judgment ever gets filed,” said Lohman.
The IRS fails to file liens 20% of the time, which can lead to a tax liability not showing up on a public records search. Research conducted by Tax Guard also revealed that when an IRS tax liability or lien is identified before an SBA loan is approved, those loans are 37% more likely to go unpaid and ultimately be deemed uncollectible compared to SBA loans given to businesses with no tax liabilities found prior to approval. With Tax Guard, clients get an exclusive look at revelatory, of-the-moment IRS data, so they don’t have to worry about making lending decisions based on outdated, incorrect information.
Byline Bank’s hard work has gotten them to where they are today, while Tax Guard’s deeper due diligence has ensured Byline Bank has stayed in good standing with the SBA.
Take it from Byline’s Senior Vice President: “Tax Guard has saved us from a reputational risk with SBA,” said Laima Lohman. “That’s something that’s very important to us. We take pride in being the second largest SBA lender.”
To read the full Byline Bank case study and learn how we’ve helped thousands of other lenders like you, check out the Tax Guard Resources page.
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