A growing number of SBA lenders are utilizing electronic signatures on their SBA forms and documents, including loan documents, which require a signature. SBA lenders must be mindful of the strict requirements placed by the SBA on the technology utilized to obtain electronic signatures. SBA lenders who fail to adhere to the standards prescribed by the SBA, as well as their own internal electronic signature processes, may be held accountable by the Office of Credit Risk Management (OCRM) for not complying with the electronic signature standards and requirements set forth in Appendix 10 of SOP 50 10 6.
It is the SBA lender’s responsibility to make sure the technology vendor it uses (i.e., DocuSign, Adobe Sign, SignNow, PandaDoc, etc.) complies with Section 101 of the Electronic Records and Signatures in Global and National Commerce Act (the ESIGN Act) 15 U.S. Code § 7001. This federal statute recognizes the general validity of electronic signatures, while providing for specific consumer disclosures and consents needed to preserve consumer protections of the individual executing documents or instruments electronically. The full scope of the ESIGN Act is beyond the scope of this article. See generally, 15 U.S. Code § 7001 et. seq., effective October 1, 2000. See also, Use of Electronic Signatures in Federal Organization Transactions, Version 1.0, January 25, 2013, Section D.
The SBA lender must make certain that their electronic signature technology vendor has the experience, capabilities, and expected longevity to meet all of SBA’s electronic signature requirements set forth in the SOP. Additionally, the SBA lender must have in place an agreement with their technology vendor that contains express provisions affirming that vendors will comply with all applicable requirements pertaining to electronic signatures mandated by the SBA. The terms of these vendor agreements must include specific language confirming that vendor’s representatives will be available to provide testimony to support the United States government in litigation regarding electronic signature data that will be introduced in court; meets disaster recovery and archiving requirements; and has in place adequate quality control processes.
As noted earlier, OCRM will review compliance with the ESIGN Act as well as standards outlined in Appendix 10 of SOP 50 10 6 as part of its oversight of SBA lenders. “As with all Loan Program Requirements, SBA Lenders may be held accountable for not complying with the electronic signature standards and requirements” set forth in Appendix 10 of SOP 50 10 6.
Retention requirements for electronically executed documents are the same as those for documents executed in wet ink. “For records signed electronically, the audit trail as well as any computer systems (including hardware and software), controls, and documentation must be readily available for, and subject to, SBA inspection for the same periods as records signed in wet ink.” Id. Finally, the lender’s electronic signature system must be able to reproduce electronic records as accurately as if they were paper when printed or viewed and must be made available to SBA on request.
For more information regarding SBA requirements in connection with electronic signatures, contact the attorneys at Starfield & Smith at 215.542.7070.