Sam Jones

Introduction for those in the SMB ETA Space: I currently manage the SBA department of a $4B credit union and have a few certifications that I'm proud of: - Advanced Lender Diploma from the National Association of Government Guaranteed Lenders - 1 of 61 recipients in the country. - Certified Mergers & Acquisitions Professional from Kennesaw State University - comprehensive program related to deal assessment, negotiation, and valuation. In my 10 years in SBA lending, I have been actively involved in the following: - Originating SBA 7(a), 504, and Express loans. - Underwriting & due diligence on all deal types. - Closing, doc prep, and contract review on biz acqs. - Portfolio audits with direct reporting to the SBA. - Downgrades & workouts of non-performing loans. - Liquidation of collateral (including personal RE). I have performed every single task related to an SBA loan, including scraping every penny out of defaults, representing lenders in bankruptcy court, and waiting patiently for guaranty repurchases. SBA lending can be nasty business and I've quite literally seen it all. My goal here is to bring all of the WTF out of the shadows and make sure borrowers are informed. I'm a firm believer that there are only two types of SBA lenders, and the "certainty to close" mantra is a fallacy. I plan to continue my previous series of posts, "Deals Gone Bad" and "What They Don't Tell You About SBA Loans", so I hope you'll follow along.

FROM SWEET TO ELITE

WARRRRRRRIOOOOOOOOOOOORS COME OUT AND PLAYYYY-EEEEEEEE-AYYYYY

Last night, I discussed the move The Warriors. Still haven't found a person who didn't love that movie.

I can’t tell what’s more entertaining, the NFL/NCAA coaching carousel or the SBA BDO carousel.

@commbankerguy I find it baffling how short of a memory we have.

I’m starting to see larger banks use swaps to offer 5 year fixed rates at 5.99% to customers. They feel like it’s a no brainer but customers and maybe bankers do not know or remember what happened during GFC.

@EndresenHeather @LumosData It’s the lenders…always has been. It will get worse.

🚨🗞️SBA Loan News: Updated Default Rate Data courtesy of @LumosData (the raw data comes directly from the SBA). Not surprisingly, SBA loan default rates continued to climb in fiscal year '25. It was a rocky year for US Small Businesses in many ways. The small bright spot, Acquisition Loans continue to outperform loans to start-ups (not a surprise) but also loans to existing businesses, making it the safest category from a probability of default perspective. What do you think is causing the increasing default rates, and do you think this trend will turn back the other direction in 2026?

Expanding my network a little and would like to know a solid SBA lender in or around the following areas: - Tulsa and or Oklahoma City - Nashville - Denver - Las Vegas Not someone who can lend just there, but someone physically located in the market. Open to live connections or intros in DMs.

@andyharbut Can’t wait to email you these exact words on the next deal we do.

The bank: "we have the policies we made you bind before you bought the business, but we need the coi's for you to close." Insanity.

I'm going to start doing annual SBA predictions in January every year, and while the government FY doesn't align with the calendar year, Q2 (Jan-Mar) has historically been an active time in policy revision and procedural notices. So for 2026, here are some things that I think we can expect on the horizon: - Another shutdown in February, October for sure, with a real chance of 7(a) funding being exhausted by the end of the FY. This is especially true if HR 3174 goes the distance. - A revocation of a certain large lender's ability to participate in the 7(a) program as a Preferred Lender. - An update to the list of ineligible companies/activities allowed for the 7(a) program directly resulting from recent news of alleged fraud. - The release of a searchable database (probably in conjunction with FOIA and fraud allegations) that documents agent (i.e. broker) fees and the loan that they are tied to. I have been told that this is in process. - Further restrictions regarding agents being paid from both loan proceeds (buy-side advisory) and the net gain on secondary market sales (lender referral fees). - Additional requirements for the MARC loans, similar to the guardrails that were instituted for the WCP lines of credit, following a wave of early default indicators. Specifically, cash reserve requirements. - Further pull back on who is allowed to have minority ownership in applicants receiving SBA loans - my prediction is eventually 19% or less - but there will more countries added to the list of exclusions. - An initiative to transition the GLPC and Servicing Center to AI automation. Follow along for an ongoing look into my crystal ball that is clouded by coffee and cynicism.

I’m a fan of EOS as well. I only see it fail when people choose to implement pieces of it. Reading Traction and using only what you like isn’t “running on EOS”. An example is “Right People Right Seats” is often ignored or interpreted incorrectly. Also, I don’t believe it’s designed to fix a company that is failing, but to help successful/growing companies mature.

I completely disagree. The basics of EOS are everyone is on a team. Every team meets weekly. Every team has a scorecard. Every team has initiatives. Every team tracks issues. Every team has commitments. That is just the basic process of running a business. If EOS is too complicated then you aren't doing it right. If the key to your business is getting 3 things done, then use the basic EOS process to drive those three things. Make your weekly scorecard about those three things. Make those three things the initiatives. Etc. Etc. I hear all of the time that we don't need to meet weekly. Those are almost always the same companies that have poor employee engagement scores with lots of comments about lack of communication. They generally also don't like our quarterly employee surveys. EOS has some hokey stuff. The whole idea of a visionary versus operator is wacky to me. I think the idea that everyone should have a number is a good one but hard to implement in practice. But the basics of EOS are 100% right and will work in any business. We run both Hidden Harbor and all of our portcos on what we call our Value Creation Engine. It isn't EOS but it shares many of the same core concepts...

@seanplanchard Sean is that really you!? You're back!

@SamJonesKCBiz Year 4

In which year of law school are you taught to redline and tirelessly negotiate non-binding LOIs?

@rledbetterCPA I’ve been seeing a few 1120-S forms with no owner compensation & I’ve been making a big deal about it. Am I overreacting?

5 ways DIYing an S-Corp can go wrong: 1) Debt-financed distributions 2) Non-pro rata profit distributions 3) The ever-growing shareholder "loan" 4) Un-reasonable (or nonexistent) salary 5) Partnership terms in the Operating Agreement

Me opening the first draft of the purchase agreement sent by seller’s counsel.

@molzer The winged zebras are awesome.

Why do marketing teams drop the ball so hard when it comes to rebranding? No idea. But we didn’t. Check out the rebrand we just wrapped up for our 100 year old redevelopment project; The Aladdin

@admsteiner I refi 7(a) with 7(a) all the time. I actually refi a lot of conventional to 7(a) also. Remove covenants, balloons, stretch the amortization, etc.

I can’t take you how many 7(a) loans I refinance into lower, fixed-rate 7(a)s or conventional financing but it’s a lot

@blueprintsmb22 I don’t know exactly, but this particular location had anywhere from $120m-$160m for the prior 3 years in s179 expense, all related to the machines. Doc claimed it was necessary. One location, similar revenue.

@SamJonesKCBiz Interesting - how much do those costs do you know?

Med spa SMB - is this a good price? $2.8mm for 850k cash flow? They claim it’s growing nicely. Margins uncomfortably high for a NYC based business. Mamdani fears?

You’re right, Jerry. I know that you use the term “certainty to close” as part of your value proposition, & I should have used a different phrase to describe how these lenders operate. My apologies as you are 100% correct that there are lenders that operate quickly, efficiently, & manage an acceptable risk profile. Next time I make up some crazy stuff, I’ll leave that terminology out!

TBH not even sure why everyone is all worked up about this Sam. My only contention is you dishing on certainty to close lenders, the definition of which does not have to mean taking on bad deals. In my book that just means that you aren't dragging borrowers through the mud for many months, and that you aren't retrading term sheets or denying deals based on previously known information. Unfortunately, most lenders fall into this bucket and just waste borrowers time and money.

So one of the fastest growing SBA lenders in the country is staring in the face of a near 20% default rate. SBA policy was/is not the issue - it’s greedy lenders that try to outrun their losses.

Well loan count volume isn’t the same as loan dollar volume, but that’s not important. I know what you’re saying. I guess I would ask why someone wouldn’t believe that a bank that relies on secondary market premiums as a main profit center would lean into riskier deals that are guaranteed by the government? Or why that business model might fracture as volume/profit grows, & pressure mounts for that trajectory to continue? It’s true, regardless if anyone believes it or not.

@SamJonesKCBiz Right. You’re making a claim that a top lender has one in five loans defaulting but there isn’t anything to substantiate this. Why should someone believe this?

@SBA_Matthias I can’t show data without naming the lender, which I’m not going to do. I have 600 followers, I don’t have anything to gain from whatever engagement this generates. The point was, that regardless of policy, there’s always going to be bad lenders doing bad loans.

@SamJonesKCBiz Is there data to support this or is this post just to get eyeballs and engagement?