Transforming a Neglected Sector: Using Commercial Tech to Modernize Government Lending

Despite rapid innovation in the private sector, government IT systems often struggle to keep pace. Decades of custom-built platforms and siloed workflows have left agencies with brittle legacy systems, mounting technical debt, and costly operations and maintenance. These challenges are well known — but what’s changing now is how the federal government is tackling them.

In April, the Trump administration issued an executive order directing agencies to prioritize commercially available products and services. This move joins a growing set of reforms offering agencies new tools for modernization:

These tools offer a new playbook for acquiring and scaling federal IT systems. Nowhere is this more urgently needed than in the federal lending ecosystem — a vital but often overlooked area of government technology.
Across the federal government, there are over 130 distinct lending and credit programs —supporting homeownership, small business growth, disaster recovery, higher education, farming, shipbuilding, and more. These programs affect millions of Americans and collectively manage hundreds of billions of dollars in loans and guarantees.

Yet many of these systems run on aging, fragmented platforms with outdated interfaces and manual processes that slow the disbursement of borrower funds, increase risk, and allow fraud.

These programs are central to federal missions and public trust — but have lagged behind in modernization investment.

SBA Showed What’s Possible
During the COVID-19 pandemic, the Small Business Administration offered a clear example of what modern lending systems can look like. Faced with the urgent need to process emergency loans at massive scale, SBA turned to a commercial cloud-based solution.

Rather than building from scratch, SBA implemented a configurable, secure platform that scaled rapidly and improved the experience for borrowers and administrators alike. The transition took weeks — not years — demonstrating that with the right tools and agile procurement, agencies can move fast and still get it right.

It’s time to apply that lesson across the board.

Private-Sector Lending Doesn’t Wait — and Government Can’t Either
In commercial banking, lenders don’t spend five years overhauling core systems. They deploy modern software in 6–12 months — solutions that evolve continuously with customer needs and regulation.

These platforms deliver security, real-time fraud detection, digital onboarding, mobile-first design, and analytics — all built to integrate with modern APIs and data standards.

While federal lending has unique requirements, core processes like intake, eligibility, disbursement, and servicing map closely to private-sector systems. That makes these programs ideal candidates for tailored commercial solutions.

FAR 2.0 Levels the Field for Innovation
One of the most meaningful FAR 2.0 changes is how agencies evaluate vendors. Past performance has long been a barrier for newer entrants. Now, agencies are encouraged to use live product demos and functional testing to assess solutions in real time.

This shift allows commercial products — especially those already proven in other sectors — to compete on what they can do, not just what they claim to do.

For lending programs, this is a game-changer. Agencies can now evaluate platforms under real-world conditions: processing applications, verifying documents, detecting anomalies. They don’t have to rely on resumes or proposals — they can see results upfront.

This makes procurement more competitive, more transparent, and more focused on outcomes.

Why Lending Programs Are Ideal Testbeds
Not every system is suited for agile acquisition or commercial-first transformation. But federal lending checks all the boxes:

With the right acquisition strategy, agencies can pilot commercial platforms, validate performance, and scale quickly. Vendors can offer phased deployments, outcome-based pricing, and risk-sharing models that build trust and deliver value.
None of this happens without action from contracting officers, program managers, and IT leaders. Agencies must embrace the flexibilities now available to them, shift from custom development to product evaluation, and build true partnerships with vendors who bring both technical strength and public-sector fluency.

Industry must also show up differently — ready to demonstrate, not just describe, how their platforms meet mission needs. That means proving functionality, offering clear pricing, and tailoring solutions without demanding months of customization upfront.

A Sector Worth the Spotlight
Federal lending programs are too important to be held back by outdated, fragmented systems. With new policy tools, procurement flexibility, and successful models like SBA’s COVID-era shift, modernization is no longer out of reach.

By treating lending systems as testbeds for agile acquisition and commercial platforms, agencies can improve speed, security, and user experience — while setting a precedent for modernizing other critical programs.

This sector is ready. The tools exist. It’s time to act.

This op ed initially ran in the Fall Edition of the PSC Service Contractor Magazine.

Bill Webner is the Chief Executive Officer of Allocore. Allocore powers leading government loans, grants, and fraud prevention programs with a unified platform built for efficiency and security. With trillions in loans and grants processed and billions in fraud prevented, Allocore brings the precision of commercial banking technology to the public sector.