Best Practices: Recently Announced Changes to Community Advantage Pilot Loan Program
On April 29, 2022, the U.S. Small Business Administration announced important changes to the Community Advantage (CA) Pilot Program. 87 FR 25398. The changes take effect on May 31, 2022. They follow closely in the heels of changes announced on April 1, 2022, which extended the CA Pilot Program until September 30, 2024 and lifted ... Read More
Best Practices: Underwriting and Documenting Working Capital Disbursements
SBA’s Office of Credit Risk Management continues to focus on the adequacy of lenders’ underwriting and documentation of working capital disbursements on their 7(a) loans. Lenders are required to thoroughly underwrite the adequacy of a borrower’s working capital needs as part of its approval process. An analysis of the Borrower’s cash flow cycle, including its ... Read More
Best Practices: SBA Form 1050 and Other Disbursement Considerations for SBA 7(a) Loans
One common reason for SBA to issue a repair or denial of the SBA guaranty is a Lender’s failure to properly disburse an SBA loan in accordance with the use of proceeds set forth in the SBA loan authorization (the “SBA Authorization”). Therefore, it is imperative that Lenders exercise caution when closing and disbursing SBA ... Read More
Best Practices: Debt Refinance Documents Lenders Should Obtain
In a recent presentation by SBA on guaranty purchases and its 10 tab process, the Agency noted that lenders not infrequently provide inadequate documentation to support their debt refinancing “uses of proceeds.” Without proper documentation on debt refinance, purchase submissions will be “screened out,” meaning that the submission will be returned to the lender. In ... Read More
Best Practices: The Federal Reserve’s Interest Rate Policies Require SBA 7(a) Lenders to Re-examine their Interest Rate Practices
On March 16, 2022, the Federal Reserve (“the Fed”) raised interest rates by 25 basis points (or “bps”) in an effort to tamp down inflationary pressures. The Fed also indicated that as many as six more increases were likely this year, with more coming in 2023. This announcement provides an opportunity for 7(a) lenders to ... Read More
Best Practices: Lender Liability for PPP Loan Fraud
As reported in an earlier edition of Best Practices, it has been estimated that at least 15% of all PPP loan disbursements have at least one indicia of fraud. Until now, the apparent focus of the U.S. Department of Justice has been on the criminal prosecutions of borrowers who committed fraud in applying for PPP ... Read More
