SBA advances loan sale technology
Use of Open E-Cry technology enabled bidders to post offers in real time over the Internet
The Small Business Administration conducted a loan asset sale entirely online for the first time last week.
The agency has conducted five loan asset sales, and with each one, SBA has developed new techniques. This time, SBA used Open E-Cry technology, which enabled bidders to post offers in real time over the Internet.
"We got a lot more activity as a result of this E-Cry sale," said Arnold Rosenthal, assistant administrator for portfolio management at SBA, who compared the Open E-Cry method to using eBay, the leading Web-based marketplace.
The auction attracted $408.2 million in winning bids Jan. 15. The agency sold about 29,700 loans with an unpaid balance of $611 million. The loans were sold in 29 pools, and the Open E-Cry method was used for a portion of the pools. The rest were sold through sealed bids also submitted online.
"This asset sale was a prime example of how to leverage resources more effectively through technology," SBA Administrator Hector Barreto said in a Jan. 24 news release.
KPMG Consulting Inc., SBA's transaction financial adviser, partnered with Hanover Capital Partners Ltd. to run the sale on HanoverTrade.com, a worldwide Web-based exchange for trading. In previous sales, the agency enabled investors to bid online and to perform due diligence over the Internet.
"We feel that has made a huge difference," said Richard Blewett, director of asset sales at SBA.
The agency's five loan asset sales have totaled $2.7 billion in gross proceeds as part of a governmentwide initiative to transfer federal loans to the private sector.
"We're still evaluating it," Rosenthal said. "We're looking to increase our usage through technology. So far, we seem pretty pleased."
The next bid date is scheduled for August.
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