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7(a), SBA Express and 504 Loan Servicing, Liquidation and Purchase RAPID IMPROVEMENT CAMPAIGN I. Leadership Jumpstart Event Report December 15, 2006. Contents. Recap of Campaign Background and Charter Leadership Jumpstart Event Participants and Process Executive Summary

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7 a sba express and 504 loan servicing liquidation and purchase rapid improvement campaign i
7(a), SBAExpress and 504 Loan

Servicing, Liquidation and Purchase

RAPID IMPROVEMENT CAMPAIGN I

Leadership Jumpstart Event Report

December 15, 2006

contents
Contents
  • Recap of Campaign Background and Charter
  • Leadership Jumpstart Event Participants and Process
  • Executive Summary
  • Incoming Participant Perspectives on Change
  • Understanding the OCA Loan Processing Performance System
    • End-to-End “As Is” Performance System
    • Breakdown of Loan Portfolios: 7(a), Express, 504 and Recovery
  • 7(a) Loan Process
    • Value-Stream Map
    • Process Efficiency Analysis & Breakthrough Opportunity Size-Up
    • Breakthrough Vision for Change & Redesign Process Map

VII. SBAExpress Loan Process

    • Value-Stream Map
    • Process Efficiency Analysis & Breakthrough Opportunity Size-Up
    • Breakthrough Vision for Change & Redesign Process Map
contents cont d
Contents (Cont’d)
  • 504 Loan Process
    • Value-Stream Map
    • Process Efficiency Analysis & Breakthrough Opportunity Size-Up
    • Breakthrough Vision for Change & Redesign Process Map
  • Asset Recovery Process
    • Value-Stream Map
    • Process Efficiency Analysis & Breakthrough Opportunity Size-Up
    • Breakthrough Vision for Change & Redesign Process Map
  • Summary
    • Productivity Gain Projection
  • Improvement Opportunity Portfolio Recommendations
    • 7(a), SBAExpress, 504, Asset Recovery, and Enterprise-Wide Improvement Opportunity Portfolios
  • Rapid Improvement Campaign I Action Plan
    • Overview
    • Proposed Rapid Action Team Charters and Assignment
    • Proposed Project Leadership Decision Projects and Assignments
    • Proposed Campaign Calendar and Milestones
slide4

Foreword – Why Change?

“We are impressed with the people at SBA. The agency has become customer oriented and it’s clear that SBA wants a successful partnership with lenders…But we want consistent, reasonable, and timely service across the SBA. We should know what to expect and when to expect it based on predictive processes and consistent quality.”

- SBA Lender Partner

slide5

Rapid Improvement Campaign I Charter

Align OCA and other key stakeholder organizations on the breakthrough vision and high priority improvement opportunities for achieving a minimum 25% improvement in loan processing performance in fiscal year 2007.

GOAL

  • Elimination of non-value adding activities that frees up more staff time for proactive customer service.
  • More transparent, clear accountability and ownership of performance – both loan portfolio and loan processing.
  • Speed in driving improvement recommendations into action.

SUCCESS

METRICS

Show measurable improvements by:March 31, 2007

START: November 28, 2006

CALENDARCOMMITMENTS

slide6

Rapid Improvement Campaign I Charter (Cont’d)

  • Streamlined processes for servicing, liquidating and purchasing loans consistent across Processing Centers.
  • Scorecard for linking and tracking loan portfolio and loan processing performance.
  • Reduction in all processing backlogs.
  • Simplified, risk-adjusted SOPs that promote both efficiency, customer service and compliance.
  • Proactive customer service that anticipates resources and prevents problems before they happen.

EXPECTEDCHAMPAIGNOUTPUTS

leadership jumpstart event participant list
Leadership Jumpstart Event Participant List

CAMPAIGN EXECUTIVE BOARD MEMBERS:

CAMPAIGN SPONSORS:

Steve PrestonMike HagerMike PappasJenni Main

Jim HammersleyBryan Hooper

Katy Ballenger

Steve GalvanChristine LiuJanet Tasker

Mike HagerJanet TaskerJohn Miller

JUMPSTART EVENT PARTICIPANTS

Mike Hager, OCA HQ

Janet Tasker, OCA HQ

Jim Hammersley, OFA HQ

John Miller, OCA HQ

Walter Intlekofer, OFA HQSteve Kucharski, OFA HQKaty Ballenger, OCA HQ

Stan Nakano, District Office, UtahDavid Dickson, District Office, PennsylvaniaLinda Nelson, District Office, Arkansas Hien Nguyen, Sacramento LPCLora Loethen, OLONina Levine, OGCEric Benderson, OGC

Raymond Baca, OCFO, Colorado Terry Hetherington, Santa Ana NDLLC

Dick Blewett, NGPCDana Relyea, NGPCGraciela Gatell, NGPC Hazel Zackery, NGPCRick Geyer, NGPCVanessa Piccioni, NGPC

Denis McCaghey, Little Rock CLSCNique Carrington, Little Rock CLSCJerry Johnson, Little Rock CLSCWayne Reid, Little Rock CLSCJoel Stiner, Fresno CLSCLeslie Niswander, Fresno CLSCGary Wamhof, Fresno CLSCTheresa Pike, Fresno CLSC

Rick Adams, Fresno CLSC

Bryan Hooper, OLO

FACILITATION TEAM

Mike Chervenic, ICOR Partners

Kamal Kaur, ICOR Partners

Greg Kurgansky, ICOR Partners

Irina Carnevale, ICOR Partners

Rick Tucci, Leap Technologies

Bob Daly, Leap Technologies

leadership jumpstart event methodology
Leadership Jumpstart Event Methodology

DEFINE the Process & Requirements

  • What is the process and the requirements for meeting customer expectations?

1

  • What’s adding value in the process today? Where’s the waste? What’s the opportunity for performance gain?

MEASURE “AS IS” Performance

2

  • What is the shift in process design required to achieve breakthrough performance?

ANALYZE What Needs to Change

3

INNOVATE Breakthrough Designs& Solutions

  • How can we apply Lean, Six Sigma and innovative thinking to make a quantum improvement in performance?

4

CONTROL For Rapid,Risk-ManagedImplementation

  • How do we accelerate implementation of improvements while minimizing risk?

5

executive summary
Executive Summary

The Jumpstart Event Team validated the Pre-Event Baseline Assessment conclusion that the servicing, liquidation and purchase process for SBA 7(a), SBAExpress, and 504 loans is overly complex and ripe with opportunities to improve productivity and customer service.

The Jumpstart Team identified many complicating factors that currently block a breakthrough in loan service performance including: The broad network of stakeholders with different interests and priorities; a large distribution system of lenders of varying experience and loan servicing discipline; disconnected information systems; burdensome SOPs; and, performance metrics and goals that tend to reward activity over analysis and continuous improvement.

To unravel the current complexity, the Jumpstart team focused on analyzing the end-to-end performance of four core value streams that drive loan servicing performance: 7(a) Loans; SBAExpress Loans; 504 Loans and Asset Recovery of these loans.

executive summary cont d
Executive Summary (Cont’d)

Comparison of “As Is” performance on these core value streams to potential performance (when delays and rework are eliminated) indicates that a 25% improvement in processing efficiency (measured by factors such as processing turn time, total “touch time” and cost per loan and backlog levels) is well within reach through effective, coordinated process improvement action.

The Jumpstart Team crafted a set of Breakthrough Redesign Maps to provide a target for aiming and executing actions to improve performance in each core loan processing value stream.

Improvement Opportunity Portfolios were generated for each core value stream and sorted for immediate, mid-term and longer-term action.

A total of 43 actions were targeted for execution over the next 90 days using a combination of Rapid Action Teams and Individual Project Champions.

The resulting Rapid Improvement Campaign I Action Plan developed from the Jumpstart Team’s work will allow OCA to move ahead aggressively, but with tight controls, to breakdown the barriers to improved performance and build greater teamwork and cooperation both within OCA and across stakeholder communities.

incoming perspectives of jumpstart participants
Incoming Perspectives of Jumpstart Participants

What are your highest hopes for what this Rapid Improvement Campaign can accomplish?

  • We will get the resources needed to support changes.
  • We will clarify how to define campaign success – what does a 25% improvement in processing efficiency mean?
  • We will identify current processes that we can eliminate through automation, delegation to partners or by just not doing them.
  • We will initiate risk-adjusted processing and oversight.
  • We will achieve consistency in all processes and policies across Centers without limiting creativity and flexibility.
  • We will move from operating as individual silos to working together across the entire SBA.
  • We will integrate our IT systems and make them more user-friendly to help us get out from under the paper.
  • We will look at the complete life-cycle of the loan and see it from the lender and borrower perspective.
  • We will get all of our people to understand the “Big” SBA mission.
incoming perspectives of jumpstart participants13
Incoming Perspectives of Jumpstart Participants

What do you see as the biggest challenges to achieving the goals of this Rapid Improvement Campaign?

  • Can we get to consensus on what are acceptable levels of risk in loan processing?
  • Can we find the fine line between “fast-forward” and being diligent in managing lender compliance.
  • Can we educate lenders on our process who only purchase two loans a year?
  • Can we really challenge existing SOPs and speed revisions?
  • Can we shift the orientation of operating in silos to collaborating across lines?
  • Can we ignite our people back at our offices to make the change?
  • Can we get the OIG to support us?
incoming perspectives of jumpstart participants14
Incoming Perspectives of Jumpstart Participants

What are the paradigms (existing beliefs, assumptions and “sacred cows”) that must be “busted” to achieve the goals of this Rapid Improvement Campaign?

  • SBA can’t trust lenders to follow good lending practices and our processes, so we need lots of oversight, signatures and paper to manage risk.
  • SBA can’t trust its employees to follow procedures so we need multiple reviews, signatures and paper to ensure compliance.
  • You can’t trust other SBA departments to support you or make decisions so don’t engage them in designing solutions to problems.
  • SBA’s mission is to not lose a dime on any loan – risk is bad!
  • It takes too long and is too hard to change SOPs, so why bother?
  • We can’t hold lenders accountable or they will stop doing business with SBA.
  • SBA is bound by Office of Personnel Management classifications.
  • Modernization of SBA’s IT systems will solve all loan processing problems.
  • Experienced employees are easily replaced in a loan processing operation like ours.
  • Loan servicing is very different from liquidation which is different from purchase – “it’s all unique.”
  • OIG, OMB and Congress will never support a major change in the status quo.
  • If you’re uncomfortable with change just wait it out.
define step work products

Leadership Jumpstart Event

Define Step Work Products

end to end performance system map for 7 a sba express and 504 loans
End-to-End Performance System Map for7(a), SBAExpress, and 504 Loans

No defined process for quickly removing barriers – black hole syndrome.

Quantity of servicing actions emphasis vs. quality andvalue of actions.

Strategy, Structure & Cultural Influences

Process Metrics

  • Tone at the top that either supports or stops change
  • Funding cycle and political influences
  • Pressure on Districts to drive loan volume without regard for processing capacity
  • Inconsistent policies toward risk tolerance
  • Lack of trust
  • Number of loan servicing actions completed
  • Servicing cost per loan
  • Ratings on lender loss performance
  • Lender, customer satisfaction surveys

Large number of lenders—difficult to manage quality.

Many stakeholders with different interests and priorities.

Suppliers/Partners

Inputs

Outputs

Customers/Partners

  • Borrowers
  • Lenders
  • Field Offices
  • SBA Employees
  • SBA Contractors/Vendors
  • Oversight Groups (OGC, OIG, etc.)
  • Loan Applications
  • Lender Support Requests
  • Change Requests
  • 1502 (Loan Data) Input
  • Regulations
  • SOPs
  • Loan Decision
  • Completed Loan
  • Final Loan Disbursement
  • Servicing Actions
  • Loan Files (Paper & Electronic)
  • Payments to Lenders
  • Performance Data (Error reports, portfolio reports, etc.)
  • Borrower
  • Lenders
  • District Offices
  • SBA Employees
  • SBA Contractors, Vendors
  • Oversight Groups(OGC, OIG, etc.)
end to end performance system map for 7 a sba express and 504 loans cont d

NAGGL/NADCO

SBA OCIO

LenderPractices

ComplianceAudits - IPIA

SOPRevisionProcess

Regulations &Statutes

StandardOperatingProcedures

Local/Home-Grown ITApplications

AgencyIT Systems

SBA OGC& OIG

End-to-End Performance System Map for7(a), SBAExpress and 504 Loans (cont’d)

End-to-end life cycle of individual loans difficult to track

Many, many SBA touches of loan file

High percentage of loan actions related to error correction

Each Center operates independently

Macro Process Flow

District Office, Lender, Web Marketing of SBA Loan Programs

Loan ApplicationReceived in Processing Center(Sacramento)

Loan File Sent toServicing Centers (Little Rock & Fresno)

Loan Serviced, Cancelled or Retired

(Little Rock & Fresno)

Loan Liquidated and Purchased(Little Rock, Fresno & Herndon)

Loan File sent to Records Center(Dallas, TX, San Bruno, CA)

Minimal focus on influencing lender practices

Many non-integrated, work around systems

Serial, non-collaborative process for revising SOPs

Supporting Activities, Processes & Systems

loan processing value streams
Loan Processing Value Streams

PURPOSE

VALUE-ADD

CRITICALPROCESSING REQUIREMENTS

Capital core access for under-serviced small businesses

Flexible array of loan options

  • Effective education of borrowers and lender partners.
  • Pre-approval risk assessment rating and oversight level slotting.

7(a) Loans

  • Highly efficient self-service loan approval process.
  • Tested risk criteria and standards.
  • Mistake-proof systems to minimize errors.

Rapid, supplemental capital access for under serviced small businesses

Accelerated processing for fast injection of funds

SBAExpressLoans

  • Strong partnership with program lenders (CDCs).
  • High-level of lender delegation based on processing skill and experience.

Fixed asset funding to promote economic development in disadvantaged communities through small business

Lower rate for large loan values

504 Loans

  • Skilled and experienced specialists in liquidation and purchasing.
  • Defined transparent process to all stakeholders.
  • Single point of ownership for case management.

Maximize recovery of dollars on defaulted 504, 7(a) and SBAExpress Loans

Recovers funds for reapplication into the market

AssetRecovery

7 a loan process as is to breakthrough analysis

Loan Processing

Leadership Jumpstart Event

7(a) Loan Process “As Is” to Breakthrough Analysis

7 a loan process value stream map page 1 preferred lender and non delegated lender

P3

SBA Collects Loan File at Disbursement and sends File Electronically to Service Center

Ship File toServicing Center

Receive LoanApplication

LoanUnderwriting(Non-delegated)

ND 2b

Make eligibility/credit decision in single review

2a

3

1

7(a) Loan Process Value-Stream Map (Page 1)(Preferred Lender and Non-Delegated Lender)

Value-Added Activity Flow

P1

P2

PLPLoan

Collect Minimal Information in Application toReserve Funds

Lender ModifiesLoan File asChangesOccur

All Lenders Sign-OffUpfront on SBAConditions forPurchase

ND 1

ND 2a

ND 2c

ND 3

Non-DelegatedLoan

  • Queue applications by size/credit score
  • Direct Large/High -risk for full understanding

Mistake ProofApplication to Prevent Incomplete Erroneous Entry into System

Ship Complete, Error Free Package to Servicing Center (until electronic transfer is available)

Notify Lender/Borrower of Decision and Conditions

End-to-End Process Flow Today

  • Enter Info.Into system
  • Reconsid- eration
  • Legal Review
  • Re-loop
  • Screen
  • Create paper file
  • Enter into system
  • Assign to loan office(if non-delegated)
  • Check eligibility
  • Legal review of eligibility
  • Underwrite loan
  • Final action decision

2b

Final LoanPrep & Review

Is manual screen required?

Multiple handling

Is legal review eligibility needed if criteria is clear?

Cost of shipping and storing files

Why create a paper file upfront?

Back for forth fax time and effort

Incoming errors entered into system

Idle employee time waiting for applications

Areas of Waste

7 a loan process value stream map page 2 preferred lender and non delegated lender

5

4

6

7(a) Loan Process Value-Stream Map (Page 2)(Preferred Lender and Non-Delegated Lender)

Value-Added Activity Flow

P4

No change to “As Is” unless all electronic files

No change to “As Is” unless all electronic files

PLPLoan

Delegate all Servicing to Lender

Value AssistLenders/Borrowersto Mitigate Risk

ND 4

Non-DelegatedLoan

Delegate allServicing to Lender

No change to “As Is” unless all electronic files

No change to “As Is” unless all electronic files

End-to-End Process Flow Today

  • Incoming request
  • Assign to loan officer
  • Recommendation by loan officer
  • Legal review
  • Final Action
  • Notify lender
  • Reconsideration
  • Re-loop
  • Locate file
  • Update system
  • Ship file to purchase/recovery center
  • Locate file
  • Dispose file to NARA

Receive Notificationof Adverse Condition/ Potential Default

Loan paidin Full

Service theLoan

Time locating loan files

1502 Error correction time and expense

Shipping costs

Excess oversight on low risk lenders

Oversight driven by lack of lender education and mistake-proofing

Areas of Waste

7 a loan process preferred lender as is vs value streamed efficiency comparison
7(a) Loan Process – Preferred Lender“As Is” vs. Value-Streamed Efficiency Comparison

Est. “Touch Time”1Cycle Time

Est. “Touch Time” 1Cycle Time

Est.First-PassQuality2

Est.First-PassQuality2

“As Is” Process

Value-Stream Process

  • ReceiveMinimal Info Needed
  • ReceiveApplication

10 mins per application

5 mins per application

100%

98%

20 mins per application (Up to 3-day turnaround)

0(No turnaround required)

  • Under-Writing
  • Lender Modify file as changes occur

100%

98%

10 mins per application (Up to 3-day turnaround)

0(ElectronicTransfer)

  • Transfer uponcollection of complete file from lender
  • Ship File toServicing Center.

100%

98%

  • LoanServicing

Up to 4 hrsforAction Reviews

  • All servicing action delegated to lender upon qualification

1 hr perAction Review

95%

80%

0(Electronic Transfer)

  • File Disposition (Purchase or Paid-In-Full)
  • File Disposition (Purchase or Paid-In-Full)

30 mins

100%

98%

5 hrs 10 min“Touch Time”

1 hr 5 min“Touch Time”

95%

TOTALS

73.8%

TOTALS

* Based on one action per file.

(1) “Touch Time” = Actual Employee Time

(2) First-Pass Quality = Percentage that action is done without rework

7 a loan process non delegated lender as is vs value streamed efficiency comparison
7(a) Loan Process – Non-Delegated Lender“As Is” vs. Value-Streamed Efficiency Comparison

Est. “Touch Time”Cycle Time

Est. “Touch Time”Cycle Time

Est. “Touch Time”Cycle Time

Est.First-PassQuality (2)

Est.First-PassQuality (2)

“As Is” Process

Value-Stream Process

  • ReceiveMinimal Info Needed
  • ReceiveApplication

30 mins per application

5 mins per application

100%

75%

9 hrs per application (Up to 10-day turnaround)

90 minsper File

  • Under-Writing
  • Single-Pass under-writing upon full pkg. file receipt from lender

95%

65%

10 mins per application (Up to 3-day turnaround)

0(ElectronicTransfer)

  • Transfer uponcollection of complete file from lender
  • Ship File toServicing Ctr.

100%

98%

  • LoanServicing

Up to 4 hrs30 min per Action Reviewed

  • All servicing action delegated to lender upon qualification

1 hr perAction Reviewed

95%

70%

0(Electronic Transfer)

  • File Disposition (Purchase or Paid-In-Full)
  • File Disposition (Purchase or Paid-In-Full)

30 mins

100%

98%

14 hrs 40 min“Touch Time”

2 hrs 35 min“Touch Time”

90%

TOTALS

32.8%

TOTALS

* Based on one action per file.

(1) “Touch Time” = Actual Employee Time

(2) First-Pass Quality = Percentage that action is done without rework

7 a loan process breakthrough opportunity size up
7(a) Loan ProcessBreakthrough Opportunity Size-Up

Major Source of Waste/Opportunity for Improvementin “As Is” Process

Estimated Cost of“As Is”Operation

Estimated Cost ofValue-Streamed Operation

PotentialSavings

(1) Move from paper loan application submission to all electronic submission by non-delegated lenders – including ability to make on-line corrections through life-cycle of the loan

12 hrs “Touch Time” per loan(Non-Delegated Loans)

2.5 hrs “Touch Time” per loan(Non-Delegated Loans)

9.5 hrs per loan X 6,900 Non-Delegated Loans per year= 65,550 hrs per year 33 full time equivalents

(2) Move to full delegated authority for servicing all preferred lender loans

Ave of 90 mins per action reviewed

Ave of 60 mins per action reviewed

30 min per loan X 39,100 Loans per year= 19,550 hrs per year 10 full time equivalents

(3) Move to 1502 error correction to lender (via Colson) with SBA review at liquidation or “60-day late cases” only

7,800 hrs per year in error correction action(Approx 4 full-timeequivalents)

826 hrs per year in error correction action(Approx .5 full-timeequivalents)

6,974 hrs per year 3.5 full-time equivalents

* Based on 1,950 hrs per year = one FTE

7 a loan process breakthrough vision for change
7(a) Loan Process Breakthrough Vision for Change

From This Today …

To This Tomorrow …

Paper-intensive process.

Paperless, fully electronic environment for both preferred and non-delegated loans.

Complex, burdensome Standard Operating Procedures that are difficult to monitor, understand and actually increase the probability of error.

A streamlined set of SOPs designed to ensure compliance to a simple-to-understand and use guidebook for both SBA employees, lenders and borrowers that reduces the probability of error.

SBA-intensive loan servicing that duplicates lender oversight while loan is active; creates backlogs and takes away time for lender education and value-added assistance.

Fully-delegated lender servicing on all loans with effective guidance by SBA upfront and efficient, single-pass review at time of disposition leading to zero backlogs.

Consistent interpretation and application of 7(a) loan regulations across the nation with a transparent process that lenders could understand.

Inconsistent loan origination review processes both within and across state lines.

Difficult and inconsistent access to SBA information and loan servicing personnel.

A user-friendly self-help Web site for lenders and borrowers and a Call Center for 7(a) loans to direct callers to “Level II” support.

7 a loan process all loans breakthrough redesign map

Lender education provided as needed to prevent downstream errors

Web-enabled guidance and access to “live” support as needed

Standard credit scoring tool

Web enabled notification to lender

7(a) loan self-help Web site (lender/borrower guidance and application form)

Call Center to request “ear-to-ear” support

Web enabled reporting, charges, mods, etc.

Web-based electronic signatures

One loan tracking system – linked and sync to Web

7(a) Loan Process (All Loans) Breakthrough Redesign Map

Expanded oversight focused on finding trends in lender processing errors, mistake-proofing and education

Lender delegation of authority redefined based on experience, risk, profile, servicing quality

Revised SOPs to support single pass review by SBA

New policy to support use of e-signatures (vs. “wet”)

1502 errors corrected by FTA/Colson

Governance

Loanapplication createdon-line

Single pass/single touchSBA review (eligibility & credit)

Lender notified/ sign-off on servicing and purchasestandards

Lender funds loan guarantee fees electronically

Disposition

  • Paid in full (send to NARA)
  • Recovery (send to Recovery Center)

Lean ProcessFlow

SBA inventories loan to servicing status

Decision approval or decline

Lenders use CPR for changes, mods reporting fees, etc.

EnablingTools

Ongoing lender education programs (District supported)

sba express loan process as is to breakthrough analysis

Loan Processing

Leadership Jumpstart Event

SBAExpress Loan Process “As Is” to Breakthrough Analysis

sba express processing value stream map

8

SBA Review Approve Part of Guaranty Claim & C/O

3

Process Application – Electronic (Issue Loan Number)

Input/Review Data. Create File (Paper or Electronic)

6

1

2

5

4

6

2

4

5

5

SBAExpress Processing Value-Stream Map

Value-Added Activity Flow

7

Lender Electronic Submission of Guaranty Purchase Package

3

Lender Initiated Electronic Servicing Actions

(SBA / Non-SBA concurrence)

2

Auto Electronic Loan # Assignment Receipt

Lender signs Guaranty/Conditions Document Upfront

4

Monitoring Loan Status

Electronic Only – Lender or FTA

6

Lender Electronic Collection of Recovery Data

5

FTA owns Reconciliation Process

1

Accurate Electronic Lender Input 100%

End-to-End Process Flow Today

  • Loan Increases
  • Loan Modifications
  • Loan Cancellations
  • Collect 1502 Lender Reports
  • Guaranty Fee Collection
  • Original Guaranty Fee Letter

Put Loans

in Liquidation Status

Application

Submitted

Via Fax or E-Tran

Ship Files. Receive Files (Docket Files)

Service

Files

FTA PMG/System Shuts Down 20th-30th of each Month (1502 System)

Reduce Electronic Files to Paper

Reinstatement. Multiple Day N-Screen Process

(2-3 Days)

Re-Keying of Data

Two Processing Tracks (Paper and Electronic)

Modifications Not Electronic

Looking in Two Places for Full Information

FTA Does Not Resolve All Reporting Issues

Incorrect Data Entry

Manually Input Loan Collateral Information to Mainframe

Reduce Electronic Files to Paper

Guaranty Fee Estimation/Calculation Complex and Inconsistent

3

Spending money

& time on shipping

Manually Input Changes to “In Liquidation” Status in Mainframe by Multiple Offices

Areas of Waste

sba express loan processing value stream map cont

10

9

8

7

7

10

9

8

SBAExpress Loan Processing Value-Stream Map (Cont.)

Value-Added Activity Flow

End-to-End Process Flow Today

- Process Lender Release /

Cancellation of Guaranty

- Submit Denial of Guaranty to HQ

- Review and Approve Liquidation (Offers in Compromise)

Paid in Full/File Closed. Ship to Federal Records Center.

Expedite Purchase.

Not Charged Off Immediately

Charge Off

Loans

Perform

Purchase

Manually Input Guarantor Information/ Multiple Input Screens (Over 4)

2nd Review of Loans at Charge-Off

Purchase Package Not Electronic

Expedited Purchase Process Wastes of Time

Review Compromise Action and Decision

Create Paper File

Pull and Ship Paid in Full Files

Areas of Waste

sba express loan process as is vs value streamed efficiency comparison
SBAExpress Loan Process –“As Is” vs. Value-Streamed Efficiency Comparison

* Based on one action per file.

(1) “Touch Time” = Actual Employee Time

(2) First-Pass Quality = Percentage that action is done without rework

sba express loan process breakthrough opportunity size up
SBAExpress Loan ProcessBreakthrough Opportunity Size-Up

Major Source of Waste/Opportunity for Improvementin “As Is” Process

Estimated Cost of“As Is”Operation

Estimated Cost ofValue-Streamed Operation

PotentialSavings

Servicing Actions

1502 Process

1-15 hrs

10 hrs

0.06 hrs

0 hrs

1.4 hrs x 11,000 loans= 15,400 hrs per year

9.96 hrs x 6,750 per process = 4,050 hrs per year

 10 full time equivalents

(2) Paper Guaranty Purchase

4 hrs

2 hrs

2 hrs X 11,000 Loans per year= 22,000 hrs per year

 11 full time equivalents (backlog)

(3) Non-Electronic Application Shipping

2.5 hrs

.05 hrs

2.45 hrs x 8,275 =

20,274

 11 full-time equivalents

* Based on 1,950 Hrs per year = to one FTE

sba express loan process breakthrough vision for change
SBAExpress Loan Process Breakthrough Vision for Change

To This Tomorrow …

From This Today …

Paper files

Cumbersome SOP

SBA System Input

Partially Functional GPTS

People-Driven Analysis and Oversight

SBA-Managed 1502 Reporting & Reconciliation

Tracking, Shipping, Archiving & Storing Paper Files.

Brick and Mortar Workspace

Rule of Two/Three

50% Unilateral Actions

“Expedited” Purchase

Electronic files

User-Friendly Guidelines

Lender Input

Functioning Electronic System of Record

Proactive System-Driven Lender Oversight

FTA-Managed 1502 Reporting & Reconciliation

Electronic File Management

Virtual Workspace

Rule of Two. Lender Initiated

100% Unilateral Actions Delegated Authority (Except Purchase)

No “Expedited” Purchase

sba express loan process breakthrough redesign map

Single Entry System

SBAExpress Loan Process Breakthrough Redesign Map

Development of E-Tran & GPTS

Digital Signatures Authority

Shift in Reconciliation Responsibility

  • Lender Self Service
  • Rotating Cross-Functional Staff
  • Electronic Stoplights to Mitigate Risk
  • Document Management System

Changes in SOP

Changes in CFR

Governance

Interface with DFC for Payments

Lender Changes:

Reporting System (ITA)

Contract Mod. For FTA

Increased Unilateral Authority for Lenders

Monitoring & Oversight

QAR

(15%)

Lean ProcessFlow

Electronic Package Review & Recommendation Action (40%)

Electronic loanapplication (Loan # Assignment)

Payment Closeout and Referral to Treasury

(10%)

Disbursement Increase / Servicing Actions

Electronic Purchase Package Submission

Product Flow

Customer Service

(25%)

Information Flow

Legal Review

(10%)

FTE Required (%)

Data Archival Systems

(Multiple Backups)

Electronic Systems Development Through Servicing and Beyond

Document Management Functionality

EnablingTools

Web Enabled

504 loan process as is to breakthrough analysis

Loan Processing

Leadership Jumpstart Event

504 Loan Process “As Is” to Breakthrough Analysis

504 processing value stream map fully delegated and partially delegated lenders

6

8

7

5

4

3

2

1

504 Processing Value-Stream Map(Fully Delegated and Partially Delegated Lenders)

Value-Added Activity Flow

F2

Special Access to Mainframe Allowed

F3

Reviewed by SBA During Oversight

1

F1

Lender Assigned to 1 of 2 Groups Based on Risk Based Analysis with Commensurate Authority

Fully Delegated-Conduct own Servicing

Consequences:

Non-Renewal of PLP

Territorial Consideration

P4

Delegated Authority to Execute Service Documents

P3

Finance/Legal/

Approval Review “Rule of 2”

P2

Submit Action Request on “Standard” Form

P1

Partially Delegated-Standard Service

Servicing Process Flow Today

CDC Sends all Docs to CLSC for Execution

SBA Signature & Send Back to CDC

Loan Officer Transmits Approval to

CDC

Loan Officer Review and Recommendation

SBA Reviews all Docs

Receive

Servicing Action Approval Request from CDC

Completed/

Compliant Servicing Account

Legal Review

CDCs Not Using Standard Forms

Program Issues Being Reviewed by Legal

Not Giving CDC Delegated Authority to Execute

Shipping Docs Back to CDC

CDCs Making Unnecessary Servicing/Requests

Evaluation Request and Not Actual Action

CDCs Not Sending Forms in via Preferred Method (Email)

Areas of Waste

asset recovery process preferred lender as is vs value streamed efficiency comparison
Asset Recovery Process – Preferred Lender“As Is” vs. Value-Streamed Efficiency Comparison

Est. “Touch Time”1

Full/Partial Deleg.

Est.First-PassQuality (2)

Est.First-PassQuality (2)

Est. “Touch Time”1

“As Is” Process

Value-Stream Process

  • Receive Servicing Action & Assign to LO
  • Receive Servicing Action & Review by Loan Specialist

4

100%

99%

0/1

2

  • Legal Center for Review

0/1

98%

  • Legal Review

98.9%

98%

.5

99%

  • Approval to CDC

0/1

  • Approval to CDC
  • CDC Sends all Docs Back to SBA

99.995%

.5

  • SBA Signature & Send Back to CDC

100%

3

0 hrs – Full Deleg.

3 hrs – Partial Deleg.

96%

10 hrs

TOTALS

96%

TOTALS

* Based on one action per file.

(1) “Touch Time” = Actual Employee Time

(2) First-Pass Quality = Percentage that action is done without rework

504 loan process breakthrough opportunity size up
504 Loan ProcessBreakthrough Opportunity Size-Up

Major Source of Waste/Opportunity for Improvementin “As Is” Process

Estimated Cost of“As Is”Operation

Estimated Cost ofValue-Streamed Operation

PotentialSavings

(1) Redundant File Room Pulls

4,000 pulls

2,000 pulls

0.08 hrs x 2,000 loans= 160 hrs per year

0.25 hrs x 2,000 loans= 500 hrs per year

 1 full time equivalents

(2) Unnecessary CDC Actions and Delegated Authority

10 hrs

0 hrs

10 hrs X 1,600 Loans per year= 16,000 hrs per year

 8 full time equivalents

* Based on 1,950 Hrs per year = to one FTE

504 loan process breakthrough vision for change
504 Loan Process Breakthrough Vision for Change

To This Tomorrow …

From This Today …

Treat CDCs as if “One Size Fits All”

Paper Loan Files

Paper Requests Permitted

CDCs Allowed to use their own Forms

Limited Training

No Action Tracking Web site

Complex Product

SBA Signs all Principal Financial Documents

Risk-Based Approach

Electronic Data and Loan Files

Electronic Requests Required

Require Use of SBA Forms with Electronic Signatures

Sufficient Proactive Training of CDCs (and others)

Action Tracking Web site for Lenders

Simple Products

CDC Signs all Principal Financial Documents under Delegated Authority

504 loan process breakthrough redesign map

Create Risk Assignment Tools or Formula for Database

504 Loan Process Breakthrough Redesign Map

Updated/New SOP Policy Consistent with the Process Flow Below

Enhanced Oversight for Servicing Actions

Governance

F3

CDC Completes all Servicing Actions and Updates Electronically

F2

CDC Inputs Information Electronically

F1

FullyDelegated

CDCs Rated1&2

1

SBA Assigns Risk Rating to Each CDC

Lean ProcessFlow

F2CDC Takes Action Consistent with Approval & Updates Electronic System

P2

CDC Inputs Information Electronically

F2SBA Analyzes & Transmits Electronic Approval

F2CDC Submits Servicing Requests

Partially Delegated

P1

CDCs Rated 3,4&5

EnablingTools

Create Electronic System

Change the Change Process

asset recovery process as is to breakthrough analysis

Loan Processing

Leadership Jumpstart Event

Asset Recovery Process “As Is” to Breakthrough Analysis

asset recovery value stream map page 1

5

7

3

8

4

6

2

5

1

10

1

2

3

4

9

Asset Recovery Value-Stream Map (Page 1)

Value-Added Activity Flow

7

8

5

6

4

1

3

2

Standardize Transcript. Complete Package. Give Priority

Risk Based Rule of 2 (Liquidation Only)

Receive Lender Advice/PDK on Website

Risk Based Charge Off Review

Risk Based Purchase Review

Train Lenders Merit in Proposal

Legal Fee Threshold ($15,000)

1 Day Mainframe (Input/Load)

End-to-End Process Flow Today

3

Notify Lender with SBA Express Purchase Kit

Review Litigation/

Liquidation Plan

Deficiency Settlement Explored

Liquidation Review/

Charge Off

Lender Advice on

Liquidation

Purchase Review/

Decision

Purchase Request

Data Entry/

In Processing

Close File

Liquidation Oversight-Actions

Redundant SOPs

Rule of 3(Litigation Only)

Duplicate Data Entry

Review of Too Many Actions

Duplicate Lender Notifications

Manual Status Responses

Dual Approval (into liquidation)

Herndon Over $5,000 in Legal Fees Sent to DO for Review

Risk-Based Rule of 3

Redundant Information to Lender

Mainframe Activities Take too Long

Incomplete Plan Package

504 Debenture Purchase

Prepare 504 Liquidation Plan

Notice of Delinquent Debenture

Liquidate Loan

Areas of Waste

asset recovery value stream map page 2

8

7

6

9

Asset Recovery Value-Stream Map (Page 2)

Value-Added Activity Flow

End-to-End Process Flow Today

Same Review for High/Low Dollar Cases (exc. $10,000)

Incomplete Package (Compromise)

Incomplete Purchase Packages

Lack of Information for Wrap Up

Pre-Purchase Stage Review

Inconsistencies of Purchase Reviews

Proposals Without Merit

Re-reviews Time

Automatic System Time-Out

No Standard Transcript of Account

Areas of Waste

asset recovery process as is vs value streamed efficiency analysis
Asset Recovery Process “As Is” vs. Value-Streamed Efficiency Analysis

(1) “Touch Time” = Actual Employee Time

(2) First-Pass Quality = Percentage that action is done without rework

asset recovery process breakthrough opportunity size up
Asset Recovery ProcessBreakthrough Opportunity Size-Up

Major Source of Waste/Opportunity for Improvementin “As Is” Process

Estimated Cost of“As Is”Operation

Estimated Cost ofValue-Streamed Operation

PotentialSavings

(1) In House – Eliminate Multiple Review-Go to Single Pass Review

62 hrs

36 hrs

26 hrs x 4,500 loans= 117,000 hrs per year

 60 full time equivalents

(2) Out House

>0

44

36 hrs X 500 Loans per year= 18,000 hrs per year

 9 full time equivalents

* Based on 1,950 Hrs per year = to one FTE

asset recovery process breakthrough vision for change
Asset Recovery Process Breakthrough Vision for Change

To This Tomorrow …

From This Today …

Treating all lenders the same when it comes to recovery

Multiple data systems. Inaccurate

Too many review stops

Too much paper

Non-standard transcripts (paper)

Rule of 3 Reviews

Partial Web-based

Lender training by SBA staff

Inconsistent guidance and response

Ineffective 1502 lender reporting

100% reviews

Full HQ process of repairs

Risk grade lenders relative to work quality. Empower top lenders to process their purchases online

Integrated user-friendly systems

Consolidated oversight review

Shift to electronic processing

Standard electronic/on-line Transcript of Account

Rule of 2 Reviews - where appropriate

Full Web-based, imaging and E-Tran technologies

Lender training Website

Clear and concise guidelines, rewards, and consequences

FTA corrects all 1502 errors

Risk-based recovery review and charge-off reviews

Delegate repair authority to Centers

asset recovery process breakthrough redesign map
Asset Recovery ProcessBreakthrough Redesign Map

Regulation-Litigation Criteria

Regulation/SOP

Partial Denials

  • Recovery does not equal liquidation
  • Review Once!
  • “If it does not fit, we do not submit.”

Quality Assurance Reviews (Post Purchase / Post Charge-Off

SOP –

Risk-Based

Governance

Center Procedures Rewards & Consequences

SOP –

Rule of 2

Approved

Lean ProcessFlow

Lender Requests Guaranty Payment

Criteria-based Litigation Review

Charge-Off (As Required)

SBA Review

Lender Notifies SBA

Payment Issued

Close File

Disapproved

Negotiate with Lender

Empower Top Lenders to Process Purchases On-Line (Risk-based Purchases) Sampling Based on Lender Rating

Web Interface

Electronic Files

Transfer Entire 1502 Resposibility to FTA

EnablingTools

Web-based Training

Electronic Transcripts

Integrated User-Friendly System

summary productivity gain projection

Loan Processing

Leadership Jumpstart Event

Summary Productivity Gain Projection

rapid improvement campaign i action plan

Loan Processing

Leadership Jumpstart Event

Rapid Improvement Campaign I Action Plan

rapid improvement campaign i overview
Rapid Improvement Campaign IOverview

Meet as Requested by Campaign Board

CampaignExecutive Sponsors

  • Preston, Galvan, Hager, Tasker, Pappas, Main, Liu, OGC, (OIG as required)

EXECUTIVESUPPORT

  • Hager, Tasker, Liu, Miller, Hooper, Hammersley, Blewett, McCaghey, Stiner, Taylor, Pucci, Ballenger

Meets Weekly

CampaignBoard

RAPIDACTIONTEAMS

7(a)

SBAExpress

504

AssetRecovery

TechnologySupport

PolicySupport

LEADERSHIPDECISIONPROJECTS

7(a)

SBAExpress

504

AssetRecovery

TechnologySupport

PolicySupport

rapid improvement campaign i roles and responsibilities
Rapid Improvement Campaign IRoles and Responsibilities

Sponsor

A member of the Campaign Board. Provide sponsorship and oversight for the Rapid Action and Leadership Decision Projects for each portfolio (e.g. 504). Elevate issues to the Campaign Board for review and resolution.

Time Commitment: 1-2 hrs/week through 3/31/07

Team Leader

Coordinate and manage Rapid Action Team activities and deliverables. Lead weekly team meetings.

Time Commitment: 4-8 hrs/week through 3/31/07

Champion

Develop brief action proposal(s) for Leadership Decision Projects.

Time Commitment: Varies by project. Short duration.

Team Member

Participate in Rapid Action or Leadership Decision teams to develop project deliverables and proposals.

Time Commitment: 2-4 hrs/week through 3/31/07

campaign i rapid action project charters 7 a loan process team
Campaign I Rapid Action Project Charters:7(a) Loan Process Team

Design and implement immediate improvements to the 7(a) loan process that will accelerate OCA toward the breakthrough vision for change and redesigned process for servicing 7(a) loans.

TEAMMISSION

Number of target improvements implemented.

Reduction in weekly run rate of 7(a) loan servicing actions completed by SBA personnel.

Reduction in weekly run rate of 7(a) loan lender submission errors.

Reduction in number of 7(a) loan compliance errors vs. baseline average determined by statistically significant sampling.

Positive feedback from 7(a) lenders based on customer satisfaction survey scores.

SUCCESS

METRICS

campaign i rapid action project charters 7 a loan process team cont d
Campaign I Rapid Action Project Charters:7(a) Loan Process Team (Cont’d)

Complete design and documentation of the 7(a) Loan Breakthrough Redesign Map including detailed guidance on roles and decision-making.

Develop and implement standard documents and templates across the end-to-end 7(a) loan process with built-in guidance on compliance requirements, mistake-proofing and customer service information.

Develop and implement lender training offerings on 7(a) program and guidance to lenders for “smooth processing.”

Develop and implement a strategy to use existing SBA Call Centers to support lender and borrower inquiries on 7(a) loans (test and then expand to cover SBAExpress and 504 loans).

Revise loan authorization documents to call attention to Consistent/ /Prudent/Reasonable (CPR) expectations for all lenders.

Simplify and rewrite the existing SOPs for 7(a) loans as necessary to support targeted improvements.

TARGETIMPROVEMENTS

Launch By: 1/19/2007

Complete By: 3/30/2007

CALENDARMILESTONES

Team Members:

Bryan Hooper

Sponsor:

Wayne Reid

Theresa Pike

Phil Mahoney

Rich Taylor

Linda Nelson

Gail Hepler

Frank Pucci

Lora Loethen

Gary Wamhof

Team Leader:

RECOMMENDEDTEAMMEMBERSHIP

campaign i leadership decision project assignments 7 a loan process
Campaign I Leadership Decision Project Assignments:7(a) Loan Process

ACTION PROPOSAL

SUGGESTED CHAMPIONS

Using risk-adjusted approach, authorize uniform, unilateral authority for all lenders for all servicing actions except for those currently exempted in preferred lender program.

Policy Support Rapid Action Team

Authorize SBA Servicing Centers to implement policy to not accept incomplete, non-required submissions from 7(a) lenders. (Must be executed in a customer-focused manner with supporting education and guidance to lenders.)

Policy Support Rapid Action Team

action proposal bank 7 a loans
Action Proposal Bank:7(a) Loans

Expand the Office of Lender Oversight to include evaluation and rating of lenders on the quality of their loan servicing and submissions to the SBA.

Streamline and simplify the 750 Guarantee Purchase Agreement.

Implement the use of e-signatures (eliminate the need for “wet” signatures).

Authorize access to SBA databases by lenders to facilitate loan servicing and reporting.

Develop a fully Web-based system for supporting 7(a) loans, including electronic forms and templates, Web-based document population, Web-based servicing/reporting and Web-enabled training and communications.

campaign i rapid action project charters sba express loan process team
Campaign I Rapid Action Project Charters:SBAExpress Loan Process Team

Design and implement immediate improvements that will accelerate OCA toward the breakthrough vision for change and resigned process for servicing SBAExpress loans.

TEAMMISSION

Number of target improvements implemented.

Reduction in weekly run rate of SBAExpress loan servicing actions completed by SBA personnel.

Reduction in weekly run rate of SBAExpress loan lender submission errors.

Reduction in number of SBAExpress loan compliance errors vs. baseline average determined by statistically significant sampling.

Positive feedback from SBAExpress loan lenders based on customer satisfaction survey scores.

SUCCESS

METRICS

campaign i rapid action project charters sba express loan process team cont d
Campaign I Rapid Action Project Charters:SBAExpress Loan Process Team (Cont’d)

Complete design and documentation of the SBAExpress Loan Breakthrough Redesign Map including detailed guidance on roles and decision-making.

Simplify and rewrite existing SOPs to create business rules for fully delegating electronic servicing of express loans to lenders.

Develop a web-based training tool for lenders and district offices to brief on guidelines for electronic servicing of loans and compliance requirements. Use as platform for education on 7(a) and 504 loans including related purchase programs.

Develop a customer satisfaction survey tool that can be applied through various channels (Web, email, telephone, etc.) to gauge overall satisfaction with SBA loan servicing support and satisfaction on specific products.

TARGETIMPROVEMENTS

Launch By: 1/19/2007

Complete By: 3/30/2007

CALENDARMILESTONES

Team Members:

John Miller

Sponsor:

Vanessa Piccioni

Hien Nguyen

Joe King

Michael Probus

Paul Kirwin

Nique

Carrington

Team Leader:

RECOMMENDEDTEAMMEMBERSHIP

campaign i leadership decision project assignments sba express loan process team
Campaign I Leadership Decision Project Assignments:SBAExpress Loan Process Team

ACTION PROPOSAL

SUGGESTED CHAMPIONS

Policy Support Rapid Action Team

1. Authorize the requirement that all lenders use SBA form 1149 for Transcript of Account to speed processing and reduce incoming errors.

2. Revise the “Rule of 2” SOP requirement on SBAExpress loans (test for extension to all 7(a) and 504 loans) to consider the lender as first review and approval and SBA as second review and final decision. (single-pass review by SBA)

Policy Support Rapid Action Team

action proposal bank express loans
Action Proposal Bank:Express Loans

Develop enhancements to E-Tran or alternative Web systems to support processing of SBAExpress loans over their entire life-cycle, including capabilities for electronic document management,E-purchase, and auto-population of forms.

Reallocate SBA servicing staffs (after reduction in current task loads) to customer service, backlog reduction and quality assurance activities.

campaign i rapid action project charters 504 loan process team
Campaign I Rapid Action Project Charters:504 Loan Process Team

Design and implement immediate improvements that will accelerate OCA toward the breakthrough vision for change and redesigned process for servicing 504 loans.

TEAMMISSION

Number of target improvements implemented.

Reduction in weekly run rate of 504 loan servicing actions completed by SBA personnel.

Reduction in weekly run rate of 504 loan lender submission errors.

Reduction in number of 504 loan compliance errors vs. baseline average determined by statistically significant sampling.

Positive feedback from 504 lenders based on customer satisfaction survey scores.

SUCCESS

METRICS

campaign i rapid action project charters 504 loan process team cont d
Campaign I Rapid Action Project Charters:504 Loan Process Team (Cont’d)

Complete design and documentation of the 504 Loan Breakthrough Redesign Map including detailed guidance on roles and decision-making.

Develop a classification model and criteria for ranking and assigning Community Development Companies (CDCs) into service quality/risk categories in order to support the granting of top quality CDCs delegated authority for 504 loan servicing.

Develop standardized forms and templates to reduce submission errors by CDCs, and mandate for use by all CDCs.

Simplify and rewrite SOPs as required to support targeted improvements.

TARGETIMPROVEMENTS

Launch By: 1/19/2007

Complete By: 3/30/2007

CALENDARMILESTONES

Team Members:

Joel Stiner

Sponsor:

Stan Nakano

David Miller

Bin McConnell

John White

Michelle Serrano

Eric Benderson

Hollis Carter

Team Leader:

RECOMMENDEDTEAMMEMBERSHIP

campaign i leadership decision project assignments 504 loan process
Campaign I Leadership Decision Project Assignments:504 Loan Process

ACTION PROPOSAL

SUGGESTED CHAMPIONS

Authorize a risk-adjusted approach to delegating authority to approve 327 servicing actions to top tier (qualified) CDCs.

Policy Support Rapid Action Team

Authorize delegation of authority to all CDCs to execute principal financial documents consistent with 327 servicing actions.

Policy Support Rapid Action Team

Authorize the mandatory use by all CDCs of SBA standard 504 loan forms as condition for specific delegation of authority and expedited processing.

Policy Support Rapid Action Team

campaign i rapid action project charters asset recovery process
Campaign I Rapid Action Project Charters:Asset Recovery Process

Design and implement immediate improvements that will accelerate OCA toward the breakthrough vision for change and redesigned process for Asset Recovery for 7(a), SBAExpress, and 504 loans.

TEAMMISSION

Number of target improvements implemented.

Increase in number of accurate, complete purchase packages submitted by lenders.

Reduction in weekly run rate of recovery actions by SBA personnel vs. baseline average.

Increase in weekly rate of liquidation cases resolved vs. baseline average.

Increase in weekly rate of purchases completed vs. baseline average.

Positive feedback from lenders based on customer satisfaction survey scores.

SUCCESS

METRICS

campaign i rapid action project charters asset recovery process cont d
Campaign I Rapid Action Project Charters:Asset Recovery Process (Cont’d)

Complete design and documentation of the Asset Recovery Breakthrough Process Map including detailed guidance on the single pass, consolidated review approach.

Review, simplify and standardize all liquidation and purchase forms and guidance to facilitate error-free, complete submission of purchase packages by lenders.

Develop training and communication program to educate District Office personnel and lenders on new liquidation and purchase process and submission requirements for expedited processing. (Work with 7(a) team to explore use of Web-based training and Call Center to support this effort.)

Develop a classification model and criteria for ranking and assigning asset recovery cases for action on a risk/return-adjusted basis to maximize overall recovery dollars.

Eliminate the “expedited” purchase of SBAExpress loans and communicate policy changes to the lender community.

Develop a uniform quality assurance program that meets regulatory standards for 7(a), SBAExpress, 504 loan processes.

Simplify and rewrite SOPs as required to support the targeted improvements.

TARGETIMPROVEMENTS

CALENDARMILESTONES

Launch By: 1/19/2007

Complete By: 3/30/2007

Team Members:

Dick Blewett

Sponsor:

Leslie Niswander

Nick Liu

Denis McCaghey

Mel Bradburn

Dana Relyea

Graciella Gatell

Jerry Johnson

Hazel Zackery

RECOMMENDEDTEAMMEMBERSHIP

Terry

Hetherington

Team Leader:

campaign i leadership decision project assignments asset recovery process
Campaign I Leadership Decision Project Assignments:Asset Recovery Process

ACTION PROPOSAL

SUGGESTED CHAMPIONS

Authorize the implementation of the risk-adjusted approach to purchase and charge-off reviews with appropriate quality assurance measures. (Review all 7(a) and 504 loans up to $50K, with sampling reviews for $25-50K.)

Policy Support Rapid Action Team

Policy Support Rapid Action Team

Authorize elimination of “Rule of 3” review of liquidation actions in favor of single pass, consolidated review approach at time of purchase.

Authorize delegation of authority to Servicing Centers for partial denial up to $50,000.

Policy Support Rapid Action Team

Authorize delegation of authority for full Offer in Compromise to Servicing Centers.

Policy Support Rapid Action Team

5. Authorize auto purchase of SBAExpress loans less than $25,000 after all recovery has occurred. (i.e., eliminate the need for Purchase Review process on lower risk loans)

Policy Support Rapid Action Team

asset recovery process action proposal bank
Asset Recovery Process:Action Proposal Bank

Develop requirements for design and implementation of a Web-based loan liquidation notification system; purchase eligibility; and self-directed purchase processing for qualified lenders at defined dollar amounts.

Design and develop a system of rewards and consequences for lenders purchase process quality (i.e., submission of complete packages and timely response to requests for information).

Develop requirements for design and implementation of an electronic transcript system.

campaign i rapid action project charters enterprise wide technology support team
Campaign I Rapid Action Project Charters:Enterprise-Wide Technology Support Team

Design and implement immediate technology improvements that will accelerate achievement of Rapid Action Team Charters and Leadership Decision Projects for 7(a), SBAExpress, 504 and Asset Recovery Processes.

TEAMMISSION

Number of targeted technology solutions implemented in time to support achievement of 7(a), SBAExpress, 504 and Asset Recovery Campaign I goals.

Ability to leverage the use of existing SBA technologies to speed deployment.

End-user satisfaction with solutions (SBA personnel and lenders).

SUCCESS

METRICS

campaign i rapid action project charters enterprise wide technology support team cont d
Campaign I Rapid Action Project Charters:Enterprise-Wide Technology Support Team (Cont’d)

Develop Web utility/infrastructure linked to www.sba.gov to support deployment of Web-based and training; easy access to forms, guidance and other tools; help requests; and user satisfaction feedback that can be used across all loan processes. (Use Herndon site as a base.)

Extend E-Tran functionality to loan servicing, providing lenders with Web-based capability to perform electronic loan servicing.

Investigate options and pilot test an electronic document storage utility with easy-to-use search capability to support the transition from paper to electronic filing.

Investigate options and pilot test extensions of E-Tran/GPTS interface to facilitate end-to-end electronic loan processing.

TARGETIMPROVEMENTS

CALENDARMILESTONES

Launch By: 1/19/2007

Complete By: 3/30/2007

Team Members:

Christine Liu and Jim Hammersley

Sponsor:

Rick Geyer

Rick Adams

Ray Baca

Hien Nguyen

Ron Whalen

Mike Avant

Steve Kucharski

Team Leader:

RECOMMENDEDTEAMMEMBERSHIP

campaign i rapid action project charters enterprise wide policy support team
Campaign I Rapid Action Project Charters:Enterprise-Wide Policy Support Team

Facilitate approval of global policy changes to support rapid execution of Campaign I objectives as well as policy changes to support specific Rapid Action Team Charters and Leadership Decision Projects for 7(a), SBAExpress, 504 and Asset Recovery Processes.

TEAMMISSION

Number of targeted policy revisions approved in time to support achievement of 7(a), SBAExpress, 504 and Asset Recovery Campaign I goals.

Ability to work cooperatively across oversight departments to gain consensus on policy revisions that streamline work with no loss (and if possible, improvement) in compliance to regulatory requirements.

Reduction in compliance errors across all loan processes vs. baseline averages determined through statistically significant sampling.

SUCCESS

METRICS

campaign i rapid action project charters enterprise wide policy support team cont d
Campaign I Rapid Action Project Charters:Enterprise-Wide Policy Support Team (Cont’d)

Develop and confirm with OGC and communicate the minimum documents required by SBA from lenders to ensure compliance for 7(a), SBAExpress, 504 and Asset Recovery.

Develop and confirm with OGC and communicate a set of clear guidelines for introducing new procedures, guidance and training to District Offices and lenders to promote compliance and avoid conflict or misinterpretation.

Create OGC- and OIG-supported guidance for adopting a risk-adjusted approach to delegation of authority to lenders; allocation of oversight resources and time to highest risk/highest return opportunities; reduction in oversight and lender-based QA in low risk transactions.

Create OGC- and OIG-supported guidance for risk-adjusted statistically valid sampling-based approached to quality assurance and auditing.

Investigate and develop a proposal for addressing the end-to-end 1502 process (including error correction) in order to improve compliance and free up SBA Servicing Center personnel for customer service and quality assurance activities.

TARGETIMPROVEMENTS

CALENDARMILESTONES

Launch By: 1/19/2007

Complete By: 3/30/2007

Team Members:

Janet Tasker

Sponsor:

Charles Thomas Jim Hammersley John Wade Jenni Main

Nina Levine Bryan Hooper David Dickson John Miller

RECOMMENDEDTEAMMEMBERSHIP

Walter Intlekofer

Team Leader:

campaign i leadership decision project assignments enterprise wide support teams
Campaign I Leadership Decision Project Assignments:Enterprise-Wide Support Teams

ACTION PROPOSAL

SUGGESTED CHAMPIONS

Engage SBA Office of the Inspector General in a productive discussion to shift their role from policy review and decision making to auditing for regulatory compliance and effectiveness of process controls to ensure high performance.

Policy Support Team

rapid improvement campaign i campaign results scorecard framework
Rapid Improvement Campaign ICampaign Results Scorecard Framework

SOLUTION IMPLEMENTATION VELOCITY

SolutionsTargetedforDeployment

SolutionsUnderway

SolutionsCompleted

PERFORMANCE IMPROVEMENT VS. BASELINE

AssetRecovery

7(a)

Express

504

Total

ProcessingEfficiency

xxx

xxx

xxx

xxx

xxx

Compliance

xxx

xxx

xxx

xxx

xxx

CustomerService

xxx

xxx

xxx

xxx

xxx

AssetRecovery

xxx

xxx

xxx

xxx

xxx

first draft top level loan processing scorecard

CustomerService

ProcessingEfficiency

AssetRecovery

First-Draft Top Level Loan Processing Scorecard

Compliance toRegulations/Standards

PerformanceCategory

CriticalPerformanceExpectations

  • Timely response to inquiries
  • Clear consistent guidance
  • Courtesy
  • East-to-access/ understand/use forms, tools & resources
  • Minimal SBA “touches” per loan
  • No processing wait time due to SBA
  • Industry comparable cost per loan processed
  • Ability to meet volume surges
  • Ability to maintain target purchase rate levels
  • Maximum dollars recovered on total purchase
  • Minimal loan processing compliance errors
  • Response time on all incoming inquiries
  • Customer satisfaction survey scores
  • Customer complaints
  • Total labor hrs per loan
  • Turn time on critical processing actions
  • Total cost per loan processed
  • Backlog level and aging
  • Performance vs. target purchase rates by loan type. Risk rating
  • Dollars recovered vs. total value of purchase by loan type/ risk rating
  • Number of QAR errors per audit
  • Number of IPIA errors per audit
  • Number of lender errors (inaccurate/incomplete submissions)
  • Level of SBA rework

Metrics

BreakthroughGoals

  • 24 hr response or less on all inquiries
  • 80-90% top box score on customer surveys
  • Elimination of recurring complaints
  • 95% adherence to touch time standards (by loan type)
  • 95% adherence to turn time standards (by processing action)
  • 98% adherence to target cost per loan
  • Recovery to target backlog within 5 days of surge
  • 95% achievement of purchase rate targets
  • 95% achievement of recovery rate targets
  • 50% reduction in QAR errors vs. historical baseline
  • 50% reduction in IPIA errors vs. historical baseline
  • 50% reduction in lender errors vs. historical baseline
  • 75% reduction in SBA rework tasks
notional dashboard for 7 a sba express and 504 loan portfolios
Notional Dashboard for 7(a), SBAExpress and 504 Loan Portfolios

Loan Product Portfolio

Loan Product Portfolio

Loan Product Portfolio

Portfolio Health

Outstanding Portfolio Value: $x  Outstanding Portfolio Volume: x#

Asset Recovery

Purchase Rate x% 

Recovery Rate $x 

Customer Service

Timely Response x 

Cust. Satisfaction x 

Web Site Visits x 

Compliance

IPIA Compliance x%

QAR Compliance x%

Processing Efficiency

Turn Time for Key Actions x 

Backlog x 

Labor Hrs/loan x 

Total Cost per loan x 

rapid improvement campaign i proposed campaign calendar and milestones
Rapid Improvement Campaign IProposed Campaign Calendar and Milestones

EVENT/MILESTONE

PARTICIPANTS

TARGET DATE

Jumpstart Report and confirm Rapid Action Team and Leadership Decision Assignments

CampaignLeadership Team

12/15/06

Launch Rapid Action Teams and Leadership Decision Projects

(2-Day Event)

All AssignedResources

Weeks of 1/8/07through 1/19/07

Rapid Action Team and Leadership Decision Project Execution

All AssignedResources

Weekly Meetings(1-2 Hrs)

Executive Review Support

Campaign Leadership Team,Rapid Action Team Leaders and Leadership Decision Champions

Weekly Conf. Call(1 Hr)

Campaign Mid-Point Progress Check(1-2-Day Event)

Campaign Leadership Team,Rapid Action Team Leaders and Leadership Decision Champions

Weeks of 2/18/07 to 2/25/07

Campaign Listen, Learn & Leverage Meeting (3 Day Wrap-Up Meeting:

1 Day for Rapid Action teams

1 Day Combined Report Out Meeting

1 Day Campaign II Planning Meeting)

All assigned resources for Wrap-Up and Report Out/Campaign Leadership Team for Campaign II Planning Meeting

Weeks of 3/26/07or 4/2/07

keys to oca rapid improvement campaign i success
Keys to OCA Rapid ImprovementCampaign I Success

> “CLOCK MANAGEMENT”All Rapid Action Teams and Leadership Decision Project champions must stick to the discipline of completing weekly action assignments; reporting/progress; and, pushing up barriers to the Campaign Board for resolution.

> “RAPID BARRIER REMOVAL”The Campaign Board working with the Campaign Executive Sponsors must operate with a “no waiting on decisions” mentality and practice. As soon as barriers are surfaced by teams and champions and solutions recommended, the board must spring to action with clear direction to maintain momentum.

> “NO FILIBUSTERING”OCA leaders and other SBA Executive Sponsors must operate with “full disclosure” of agendas. Reasons not to support recommended action must be articulated and backed with facts and data. The burden of proof must be balanced.

loan processing dashboard and scorecards

Appendix

Loan Processing Dashboard and Scorecards

measuring campaign success notional dashboard for 7 a sba express and 504 loan portfolios
Measuring Campaign Success:Notional Dashboard for 7(a), SBAExpress and 504 Loan Portfolios

Loan Product Portfolio

Loan Product Portfolio

Loan Product Portfolio

Portfolio Health

Outstanding Portfolio Value: $x  Outstanding Portfolio Volume: x#

Asset Recovery

Purchase Rate x% 

Recovery Rate $x 

Customer Service

Timely Response x 

Cust. Satisfaction x 

Web Site Visits x 

Compliance

IPIA Compliance x%

QAR Compliance x%

Processing Efficiency

Turn Time for Key Actions x 

Backlog x 

Labor Hrs/loan x 

Total Cost per loan x 

loan product portfolio processing efficiency metrics
Loan Product Portfolio Processing Efficiency Metrics

Rapid Improvement Campaign Breakthrough Rationale:

  • Lender will assume greater authority and responsibility for servicing actions
  • Lender will provide the first review for the Rule of 2
  • SBA FTA (Colson Services) will assume greater authority to correct 1502 Report errors
loan product portfolio asset recovery metrics
Loan Product Portfolio Asset Recovery Metrics

Rapid Improvement Campaign Breakthrough Rationale:

  • Consolidate liquidation oversight reviews to follow guaranty purchase
  • Delegate authority to lenders to complete liquidation and purchasing actions
  • Develop electronic submission of documents based on standard forms
  • Improve lender outreach and education
loan product portfolio customer service metrics
Loan Product Portfolio Customer Service Metrics

Rapid Improvement Campaign Breakthrough Rationale:

  • Provide self-service tools to lenders
  • Increase outreach and training events for lenders
loan product portfolio compliance metrics
Loan Product Portfolio Compliance Metrics

Rapid Improvement Campaign Breakthrough Rationale:

  • Continue to comply with Federal Regulations, including Improper Payments Information Act
loan product portfolio health metrics
Loan Product Portfolio Health Metrics

Rapid Improvement Campaign Breakthrough Rationale:

  • Continue to assess overall portfolio health

* Measurement Data Sources To Be Determined and/or Validated