Q&A on Commercial Lending
Q&A: How Community Banks Can Strategically Expand into SBA Commercial Lending
Community banks are looking for ways to better serve customers, strengthen long-term relationships, and remain competitive. SBA commercial lending is emerging as a strategic pathway to achieve these operational goals, allowing banks to not only support local small businesses but also diversify revenue, generate fee income, and deepen customer loyalty. In this Q&A feature, we speak with Brooks Lewis, President & CEO of Citizens Bank & Trust (‘Citizens’), and Richard Guillot, President & CEO of Business Alliance Financial Services (‘BAFS’), about why SBA lending matters, how to build a successful program, and where the biggest opportunities lie for community banks.
Q: Brooks, let’s start with you. What led Citizens to begin offering SBA commercial lending, and why did you decide to outsource your back-office functions?
Lewis (Citizens): We made a strategic decision to launch SBA lending because it allowed us to expand our community reach and generate new sources of fee income. However, we were starting completely from scratch. We did not have the in-house expertise, processes, or infrastructure to effectively manage an SBA program on our own. Partnering with a trusted provider like BAFS enabled us to roll out this product quickly and correctly, while navigating the complexities of SBA lending.
Q: Citizens now has a dedicated commercial lending department. How does outsourcing complement your existing operations?
Lewis (Citizens): Our note department has very limited involvement in SBA loans; their role is primarily administrative in booking loans and uploading them into our system. Outsourcing through BAFS allows us to focus our internal resources on building relationships with our customers while BAFS manages the complex technical, regulatory, and operational aspects. This partnership empowers our team to deliver SBA loans as a customer-facing product without the steep overhead of maintaining back-office expertise ourselves.
Q: Ricky, Brooks highlighted the value of partnering with BAFS. From your perspective, why is SBA commercial lending so critical for community banks?
Guillot
(BAFS): SBA commercial lending is a
real gateway product for community banks that want to remain competitive and
grow. In my team’s combined decades of experience, we have consistently seen
that when a bank can meet the financing needs of a small business owner, it creates
deeper, stickier relationships. That
business owner often moves their deposits, treasury services, and even personal
accounts to the same institution. SBA lending allows banks to confirm deals they
might otherwise have to decline because of credit appetite, collateral, or risk
tolerance. Banks that can help a small business grow are then able to secure
new loans, as well as a range of additional opportunities for long-term
engagement.
Q: Brooks, what has this meant in practice for Citizens? What results have you seen so far?
Lewis (Citizens): SBA lending has given us access to higher-than-average yields and allowed enabled us to fund loans that under different circumstances would not fit our typical credit appetite (and portfolio?). These loans are performing as expected and have enabled local businesses to expand and succeed at levels that would not have been possible without the SBA program. SBA lending has strengthened our role as a resource to local businesses and reinforced our position as a true community partner.
Q: Ricky, hearing this success, where do you see the biggest opportunities for community banks looking to expand SBA commercial lending? How is the evolving regulatory environment influencing strategy?
Guillot (BAFS): The biggest opportunity right now is in technology enablement. SBA lending is multifaceted, and community banks need platforms that support the entire process from origination and underwriting to servicing and loan boarding, while also incorporating automation tools like OCR, document recognition, and “measured” AI capabilities. Every bank has unique needs based on size and resources, so flexibility and configurability are critical.
The regulatory landscape is also tightening, pushing many institutions to adopt a more measured growth approach. Banks are being asked to demonstrate stronger stress testing and proactive risk modeling. This is why partnerships are so important, because third-party providers can offer the technology, analytics, and credit monitoring tools needed to meet regulatory expectations without forcing a bank to take on unnecessary costs or risks.
Q: Finally, what advice would you give a community banking leader who is considering offering SBA commercial lending?
Lewis (Citizens): My advice would be to invest the time to learn as much as possible about the SBA process. It is a powerful tool for serving small businesses and funding loans outside your typical credit appetite and portfolio. However, it is also a federal program, and that comes with technical requirements, operational challenges, and heightened regulatory scrutiny. Partnering with experts who understand the nuances of SBA lending can be an amplifier to get a program off the ground faster, reduce risks, and deliver on all the benefits to your customers and community.