Iowa financial institutions have a growing number of options among these firms that specialize in originating and servicing small business loans through U.S. Small Business Administration and U.S. Department of Agriculture loan programs.
   
The firms are known as lender service providers, and one of the largest in the region, Indiana-based banc-serv Partners LLC, is working to expand in Iowa. The company recently hired Shane Greenleaf, formerly a vice president of commercial banking with First American Bank, to serve as its primary in-state representative for Iowa financial institutions. The Fort Dodge-based bank was also banc-serv’s first Iowa customer in 2004.
   
“We’ve been able to get a pretty good footprint in Iowa,” said Kerri Agee, banc-serv’s president and founder. “But as you grow, you can’t do everything on your own. An opportunity came for Shane to come on board; we had worked with Shane in various organizations over the years.”
   
As a lender service provider, “we are the complete back office, from structuring of a loan to SBA approval, closing of the loan and servicing of the loan,” she said. The company also has about 10 credit union clients, including at least one Iowa credit union.
   
Agee said her firm also has been successful in contracting with some larger banks. “SBA policies and procedures are ever-changing, so larger banks have found it’s sometimes better to outsource this function,” she said.
   
Last year, banc-serv closed more than 250 7(a) loans valued at more than $150 million for clients in its 23-state territory; currently, 47 Iowa community bank are clients. The firm services a loan portfolio of more than $500 million.  
   
Greenleaf, who earlier this year was named a Business Record Forty Under 40 honoree, has 13 years of banking experience. Most recently, he managed a $50 million loan portfolio for First American Bank, where he won several top lending awards last year. He initially will work from his home, and the company’s loan production will be handled from the Indiana home office. Agee said banc-serv does not have immediate plans to open a Central Iowa office.

A Clive-based firm, Vital Financial Services LLC, has also found a niche as a lender service provider. Mike Slater, who launched the enterprise with business consultant Tom Noteboom in September 2009, said the Upper Midwest represents a good market for them because of its concentration of community banks. Vital Financial does business in Iowa, Illinois, Missouri, Minnesota, Nebraska, Wisconsin and South Dakota, with about a dozen bank customers in Iowa.
   
Slater, who has 23 years of experience in financial services, had launched Business Loan Services Inc. in 2006 to specialize in
restructuring business loans. Three years later, he partnered with Noteboom, principal of Pro Business Coaches, to start Vital Financial.
   
“When you look where community banks can compete with larger banks, it’s in the government-guaranteed loan areas,” Slater said. “I think lenders see the benefit, as they get squeezed on rates in traditional or fully secured loans.” Loans in the commercial and industrial, farm and agribusiness sectors are particularly suited for the government-guaranteed market, he said.
   
Slater said his firm has hired four full-time employees in the past four years, and is on track to reach its goal of $50 million in new loan business this year.  
   
Lender service providers can be valuable tools for lenders who aren’t familiar with SBA programs, particularly smaller banks with lower loan volume, said Joe Folsom, the agency’s district director for Iowa. In Iowa as of mid-August, the SBA has approved 393 loans through the 7(a) program totaling $130.76 million.
   
“When we look at Iowa as a whole, it’s a competitive environment for loan deals,” he said.
   
Folsom said the SBA does not keep statistics on the size of the lender service provider market share relative to the overall loan market, but noted that there are several other firms providing these services in Iowa. (see box)
   
Banc-serv’s Agee estimates that lender service providers currently serve just one-quarter of 1 percent of the $17 billion SBA loan market, “so there’s tons of room for growth,” she said.