This week on SBA Today, we dissect the sudden closure and portfolio sale of a Top 20 SBA lender, BayFirst Financial, and their aggressive small-dollar loan program (BOLT). This autopsy holds vital lessons for every lender about risk, pricing, and the current state of credit quality.

Why this matters to YOU:

• 🚨 Industry Shockwave: The abrupt shutdown of a large institution's 7(a) department and a subsequent $5.1 million loss on the portfolio sale signals immediate financial pain from exiting the business.
• 📉 Macro Warning Signs: The secondary market has been volatile, pricing pressure is down, and credit quality is deteriorating. Your own institution is making internal decisions based on these factors.
• 💸 The BOLT Program Mistake: BayFirst's aggressive BOLT program focused on smaller 7(a) loans (up to $150,000). The CEO cited stress in older, low-interest rate vintage BOLT loans. You must price for risk!
• 🔎 Risk Dissection: We examine potential risk multipliers:
  • Higher Risk Loans: Small dollar loans are inherently higher risk due to the nature and financial sophistication of the borrowers.
  • Broker Fees: This bank was known for paying high 2% broker fees , compounding the acquisition cost when defaults rose.
  • Policy: Was the program influenced by the former "Score & Go" process or affected by the collapse of the previous "Do What You Do" collateral standard?

✅ The Takeaway: The market demands a return to disciplined underwriting and a focus on fundamentals. We all want to help small businesses, but we must be prudent to stay in business.