Best Practices: Unpacking The New 7(A) Lender Matrix

On November 5, 2024, the U.S. Small Business Administration (the “SBA”) Office of Financial Program Operations released an updated Servicing and Liquidation Actions 7(a) Lender Matrix (the “Matrix”).  This new version 16 contains the first revisions to the Matrix in over four years — the last version being released by the SBA in February 2020.

The organizational structure of the Matrix has been changed.  Instead of the 4 columns of actions/approvals set forth in the previous versions of the Matrix, the updated Matrix contains just 2 columns – “Unilateral Action” and “Requires Prior SBA Approval.”  The Unilateral Action category specifies the applicable requirements that a lender must take that used to be specified in separate columns in the previous versions of the Matrix – “E-Tran Required;” “Notify Center;” or “No Notification Required.”  Additionally, in order to avoid updates to the Matrix every time a Standard Operating Procedure (“SOP”) is updated, all references to the SOPs refer only to the 50 10 or 50 57, without reference to any particular SOP version.

Additional changes reflected in the new Matrix include the following:

• Language was added to the Matrix indicating that revolving lines of credit are considered fully disbursed upon initial disbursement;
• Certain actions that a lender could take prior to final disbursement have changed as follows:
  • Changes in the interest rate after initial disbursement may now be handled through E-Tran (no Center notification required);
  • Changes to an obligor EIN or SSN for a loan approved under delegated authority may now be handled through E-Tran (no Center notification required);
  • Clarifies that a Lender must get prior SBA approval to extend final disbursement date beyond 48 months from the loan’s approval date;
  • Requires that for changes in the obligor’s address or legal/trade name of the business, Lenders must notify the Center of any such change (as opposed to merely updating E-Tran);
  • Changes to Loan Authorizations, including changes to use of proceeds, once the loan has moved into servicing and liquidation (after final disbursement), must now be updated in E-Tran. Changes to Terms & Conditions currently require updates to E-Tran.

As with prior versions of the Matrix Lenders must be mindful of the footnotes set forth at the end of the Matrix.  Without dissecting all of the footnote changes, Lenders should note that there are changes to the language in footnotes 1, 3, 6, and 9.  Five new footnotes, 18 – 22, have also been added.  Four out of these five new footnotes relate to loans that have already fully disbursed. Only footnote 20 applies to loans prior to final disbursement.  A more detailed review of the changes to the Matrix footnotes will be the topic of a future article.

Finally, language has been added that Lenders should visit the National Guaranty Purchase Center Website for liquidation and guaranty purchase questions for loans in excess of $500,000 per project and that guaranty purchase requests for loans of $500,000 or less per project should be submitted to the appropriate Commercial Loan Servicing Center.

As always, whenever a Lender is taking an action in reliance upon the Matrix, best practices are that the Lender keep a copy of the Matrix relied upon with the documentation of its action.  This practice will make any review of a Lender’s action easier for the reviewer, which could result in a quicker decision on a Lender’s guaranty request.

For questions regarding the updated Matrix and servicing and liquidation requirements, contact the attorneys at Starfield & Smith at 215-542-7070 or email us at info@starfieldsmith.com.