Lending & Credit Risk SBA Lending

Breaking down SBA lending: What is E-Tran?

Mary Ellen Biery

September 25, 2024

Read Time: 0 min

Efficiently filing SBA loan packages for approval

When an SBA lender is ready to submit loan guaranty packages and loan servicing requests, it does so through the SBA’s online portal, E-Tran.

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Key Takeaways

Loan submission platform

The U.S. Small Business Administration’s E-Tran system has long been a central tool for lenders looking to submit and manage SBA loans efficiently. Leveraging technology like E-Tran becomes even more crucial for financial institutions as economic conditions evolve, especially with recent changes in interest rates.

Indeed, the Federal Reserve's recent interest rate cut could trigger renewed interest from small businesses looking to refinance or expand under more favorable rates. Understanding the role of E-Tran in SBA lending is the first step for banks and credit unions to ensure smooth loan processing.

SBA-backed loans

E-Tran is the SBA's electronic loan submission platform, which allows lenders to directly submit loan applications and receive approvals for guarantees. Launched after the turn of the century, it is a cornerstone for financial institutions managing SBA loans, particularly those processing high volumes of applications. Before E-Tran, lenders had to physically mail all of the forms to the SBA. Once the forms were processed, the SBA’s response would also be sent back to the lender via mail.

E-Tran facilitates loan approvals, disbursements, and servicing for various SBA-backed loan programs, including the popular 7(a) and 504 programs.

Flexible terms and lower interest rates have often made traditional SBA 7(a) loans attractive to small business borrowers, but their drawbacks include lengthy loan turnaround times and time-intensive processes. Implementing electronic loan processing, or E-Tran, has significantly improved efficiency in the loan guaranty origination and servicing processes.

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Common programs using E-Tran

The two most common SBA loan programs handled through E-Tran are the 7(a) and 504 programs. Both offer substantial benefits to borrowers and lenders alike, and during times of financial stress, they are often lifelines for small businesses.

During COVID-19, more than $800 billion in Paycheck Protection Program (PPP) loans were approved as part of government relief programs for the related financial stress. Those loans also used E-Tran for origination.

However, in most years, E-Tran handles far fewer loans for the following programs:

7(a) Loan Program: Known for its flexibility, 7(a) loans can be used for working capital, equipment purchases, real estate, and more. As interest rates fall, the loans will offer more affordable monthly payments, allowing small businesses to reinvest savings into their operations.

504 Loan Program: Primarily used for purchasing fixed assets, the 504 program offers long-term, fixed-rate financing. Those loans will become even more appealing as rates decrease and businesses look to acquire real estate or equipment with minimal down payments and favorable terms.

Banks make 88% of all loans approved through the 7(a) loan program, which is the largest. Credit unions only make 2.4%. But both banks and credit unions have substantially increased their lending activity through 7(a) since 2020. Banks have issued 59,833 approved 7(a) loans so far in fiscal 2024, up 53% from 2020. Credit unions have handled 1,634 approved 7(a) loans this year, up nearly 40% from 2020.

Not all lenders offer SBA-backed loans, but many lenders who participated in helping their communities access PPP loans have continued to offer SBA loans.

Submitting loan data

While the SBA is the government agency approving the loans’ eligibility for a financial guaranty, lenders authorized by the SBA gather all necessary information from the borrower and submit it to the SBA. Lenders can enter loan data directly into the E-Tran portal, but some SBA software vendors make it easier to enter an SBA loan on the same platform as other loan types before exporting it directly to E-Tran.

Lenders receive real-time feedback on the application status of loans in E-Tran, which allows them to make quick adjustments or provide additional documentation if needed.

Finally, E-Tran's standardized application format is aimed at ensuring lenders comply with SBA guidelines to reduce the risk of noncompliance penalties or rejected applications.

How E-Tran fits in with interest rate cuts

As interest rates drop, the number of new loans to small businesses tends to rise, based on historical data from the St. Louis Fed.

With the Federal Reserve’s recent interest rate cuts, SBA loans are becoming an even more attractive option for small businesses. Lower interest rates translate into reduced borrowing costs, making SBA-backed loans an appealing choice for entrepreneurs seeking to refinance existing debt or fund new projects. Financial institutions leveraging E-Tran can quickly respond to the expected rise in loan demand, process applications efficiently, and ensure the timely disbursement of funds to borrowers.

More efficient SBA loans

E-Tran is one application within the SBA’s Capital Access Financial System (CAFS), and financial institutions must have an account set up through CAFS to access and use It. If your institution needs assistance setting up an account, you can contact [email protected].

Lenders have two options for transmitting loan packages through E-Tran. The first is to complete loan data file transfers in XML format through a system such as Abrigo SBA Lending Software (or a bank’s proprietary system) to directly deliver the files to the SBA’s E-Tran database As noted above, lenders can also access E-Tran through its web page and then enter loan information on individual loans directly on the site.

While E-Tran has improved the speed and efficiency of submitting applications, it’s not a perfect system. The system can be challenging and require a high learning curve, especially for those who are new to SBA lending. Furthermore, if there is a mistake in the application, E-Tran will send back an error message, so identifying where the mistake is and correcting it causes headaches and delays.

According to a 2023 training presentation by the SBA, lenders can find a data entry guide for E-Tran on the landing page of CAFS after logging in. The SBA also provides a step-by-step guide for lender partners to create a CAFS account.

Leveraging a vendor like Abrigo and its SBA lending software dramatically improves the efficiency of submitting loans through E-Tran. This software collects the exact data points needed, automatically generates the required documents, and returns recommendations based on qualification. Importantly, it smoothly integrates with E-Tran to submit the application quickly, so the lender doesn’t have to take extra steps. With more small business borrowers expected to apply for SBA 7(a) and 504 loans as interest rates fall, scale and efficiency will be vital for lenders to get money into the hands of small business owners as soon as possible.

Responding to fraud and compliance challenges

While E-Tran enables SBA loan submissions, lenders must remain vigilant against potential fraud and ensure compliance with both SBA and federal regulations. In particular, the SBA’s requirements for documentation, loan eligibility, and the submission of truthful information are critical components of loan processing.

The rise in SBA lending due to favorable interest rates could tempt some businesses to submit fraudulent applications. Customer due diligence software that makes it easy to comply with CDD requirements and the new beneficial ownership rule helps ensure a strong, risk-based CDD program for SBA lending.

The bottom line

E-Tran is a required tool for any lender involved in SBA lending, especially as the Federal Reserve’s interest rate cuts create a more attractive borrowing environment. By leveraging the system’s capabilities and assistance from a vendor experienced with E-Tran, lenders can process loans faster, reduce errors, and help small businesses take full advantage of SBA options.

This blog was written with the assistance of ChatGPT, an AI large language model, and was reviewed and revised by Abrigo's subject-matter expert.

Abrigo helped financial institutions secure more than $6 billion in PPP loans. We can streamline your SBA lending efforts, too.

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