Press "Enter" to skip to content

Bankwell Financial Group Partners with Lendio to Revolutionize Small-Dollar SBA Lending

Bankwell Financial Group, a Connecticut-based institution with $3.2 billion in assets, is venturing into the realm of small-dollar SBA lending through a partnership with Lendio, a Utah-based fintech company. This move marks a significant shift for Bankwell, which has traditionally focused on larger SBA loans.

Ryan Hildebrand, Bankwell’s chief innovation officer, revealed that the bank’s average SBA 7(a) loan size in recent years has been close to $2 million. However, with this new initiative, Bankwell aims to serve businesses seeking loans of $150,000 or less, a segment Hildebrand describes as “underserved.”

The collaboration with Lendio will enable Bankwell to offer a fully digital lending solution, dramatically reducing the time from application to funding. Brock Blake, Lendio’s co-founder and CEO, stated that their process can complete the entire lending cycle in about six business days.

This emphasis on speed aligns with the preferences of small business owners. A recent Lendio survey found that 85% of respondents consider speed a crucial factor when selecting a lender, while 77% prefer online or mobile app applications for credit.

Lendio, founded 13 years ago, has facilitated financing for over 400,000 borrowers. The company gained significant experience with SBA lending during the COVID-19 pandemic, processing more than 200,000 Paycheck Protection Program loans. Since then, SBA 7(a) loans have become Lendio’s fastest-growing product.

Bankwell’s initiative comes amid a push by SBA Administrator Isabel Casillas Guzman to increase small-dollar lending in the agency’s 7(a) program. This effort appears to be yielding results, with loans of $150,000 or less now accounting for nearly 9% of overall 7(a) lending volume, up from 3.4% in fiscal 2021.

Hildebrand acknowledged that Bankwell’s previous focus on larger loans was partly due to the manual nature of many banking tasks. However, he believes that Lendio’s technology can help overcome this limitation, making small-dollar lending more feasible for community banks like Bankwell.

The partnership is expected to benefit both companies. Bankwell will receive loan applications through its own channels and from Lendio, which will direct a portion of its inquiries to the bank. This arrangement allows Bankwell to expand its small business lending without significant additional investment in marketing or personnel.

To further strengthen its SBA lending capabilities, Bankwell has hired Michael Johnston as its new head of SBA lending. Johnston previously served as national sales director at Ready Capital, a top-five 7(a) lender.

Bankwell’s President and CEO Christopher Gruseke emphasized that this move aligns with the bank’s evolution as a relationship-driven, commercially focused institution committed to supporting small businesses.

The SBA has reported positive trends in small-dollar lending, with the volume of loans totaling $150,000 or less increasing by $780 million in fiscal 2024 compared to the previous year. An SBA spokesperson attributed this growth to the Biden-Harris Administration’s
recognition of small businesses’ crucial role in economic growth and job creation.

As technology continues to streamline lending processes, Blake and Hildebrand anticipate further growth in small-dollar SBA lending and increased participation from community banks. This shift could potentially reshape the competitive landscape in small business lending, allowing smaller institutions to compete more effectively with larger banks and fintech companies.