We were lucky to catch up with Ray Drew recently and have shared our conversation below.

Ray, thanks for taking the time to share your stories with us today When you’ve been a professional in an industry for long enough, you’ll experience an industry-wide U-Turn, an instance where the consensus completely flips upside down or where the “best practices” completely change. If you’ve experienced such a U-Turn over the course of your professional career, we’d love to hear about it.

When I entered the SBA lending industry in 2012, the model, (which was created in the 90’s/early 2000’s,) was for a bank to hire Business Development Officers (BDOs) in different regions throughout the country to find local businesses to lend to – and despite the internet, it hadn’t changed.

In 2012, the country was still very much crawling out of the 08 disaster. A significant number of SBA lending professionals had exited the industry as a result of the financial collapse, and certainly no new blood had entered the industry from 2008-2012, a trend that continued further into the 2010’s. I still remember walking into my first industry event and being the youngest person by about a decade.

As a young BDO, my first instinct was to build a list and create an email campaign. My employer, a small bank, looked at me like I had 2 heads. I ended up signing up for an email blast service, writing my own copy, and it proved to be effective. When I needed more business, I simply sent an email blast- which sounds crazy today, but the reason that was so effective was because I was probably the only SBA lender in their email box.

Fast forward to 2015, I started creating content onLinkedIn. People started to take notice, and I was invited to speak at an industry conference on the topic of LinkedIn marketing in 2016. I asked a 50-60 person audience who is creating content for LinkedIn and 2 hands went up. Today, 50-75% of the room would have raised their hands.

As our crusty old industry gets exposed more and more to “the latest technologies,” it’s becoming more and more obvious that disruption needs to occur – but it’s being met with heavy resistance.

Problem #1: Customer acquisition cost

To this day, banks are structuring their SBA departments like its 1996 – relying on the BDO model for deal flow. BDO’s have been able to leverage these technologies to increase their efficiency and reach – and as a result, are able to earn ungodly amounts of money. Bank executives have noticed BDOs are taking home a significant piece of the pie, but don’t know how to do anything about it.

Problem #2: Lack of technological innovation

Prior to Covid, the vast majority of shops were operating on Microsoft Excel. SBA-specific loan operating systems are early in development. The SBA industry is extremely niche with just a few hundred banks to sell the software to. Because the total addressable market is small, our industry is less attractive for software developers to create custom software for.

Problem #3: The establishment

There’s only 1 degree of separation when it comes to professionals in our industry. It’s a small world.
There is 1 trade organization – and for decades this was the singular place that lenders have relied on for guidance and training – and that’s starting to change. Also, most of the people running the SBA divisions were born into the BDO model – many of them themselves were those BDO’s in the 90’s/early 2000s. The establishment runs the industry, and I don’t think they want it to change.

We are at a pivotal moment in the SBA lending industry. In the last 12 months, we’ve seen a big shake up among a plethora of shops including acquisitions, mergers, layoffs, and closures. I believe this to be a not-so-subtle sign that the model isn’t working.

And believe it or not, the SBA is on the side of change and innovation. In 2023, they rolled out sweeping changes to their flagship lending program – the 7a loan – to help streamline the process and make capital access easier for small business entrepreneurs. I believe all of these developments have set the stage for that much needed disruption and innovation to finally occur.

As always, we appreciate you sharing your insights and we’ve got a few more questions for you, but before we get to all of that can you take a minute to introduce yourself and give our readers some of your back background and context?

Ray a 6x Top Producing SBA BDO and the Host of #1 Podcast in the SBA Industry: The Art Of SBA Lending. Ray has dedicated his entire professional career to helping small business owners navigate the intricacies of SBA borrowing.

His job is to structure a customized loan that meets the unique needs of the business and guide the entrepreneur through the borrowing process. He has a passion for helping small business owners and aspiring entrepreneurs build their small business empire through owner-occupied commercial real estate, business acquisitions, and partner buyouts up to $5,000,000.

How’d you build such a strong reputation within your market?

Content. I was one of the first people to use content creation and social media marketing in the SBA lending industry. That, coupled with my success. I am one of the top producers in our industry. If you’re really good at what you do, and you do it out in the open, it’s really easy to build a reputation.

Can you tell us about what’s worked well for you in terms of growing your clientele?

While I’m constantly experimenting with the latest and greatest sales and marketing strategies, you can’t forget about the basics. My most effective strategy is: answering the phone. People are SHOCKED when they dial my number and I actually answer. I approach the job with tremendous urgency and clients appreciate that. The trick is to build a team around you that you can delegate certain tasks to so that you can be as accessible as possible to your clients.

Contact Info:

• Website: www.sbaray.com
• Instagram: @_SBARAY
• Linkedin: https://www.linkedin.com/in/raydrew4589/
• Twitter: @SBA_Ray
• Youtube: @SBA_Ray