SBA nears e-financing

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

process.

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

business operations.

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

next year.

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.