Best Practices: Basics of SBA Lender Oversight
SBA lenders have a responsibility to ensure that they maintain the integrity of the SBA loan programs throughout their institutions. 13 CFR §120.140(f) prohibits SBA lenders from engaging “in conduct reflecting a lack of business integrity or honesty”; and the SBA monitors the lending practices of its participant lenders to assure compliance. The SBA’s Office ... Read More
Best Practices: SBA Provides Disaster Relief to Small Businesses
In the wake of the catastrophic devastation caused by hurricanes Harvey and Irma, the SBA has coordinated with FEMA to provide disaster assistance to small businesses in affected areas. Under the “Disaster Loan Program” eligible borrowers may be able to obtain a low interest fixed-rate loan to rebuild their businesses. Under the deferment program, borrowers ... Read More
Best Practices: SBA Tweaks the EPC/OC Rule
Following an extensive review and consideration of public comments, the SBA stands poised to put into effect regulatory changes to the Eligible Passive Rule (“EPC/OC Rule”). Set to become effective on September 20, 2017, after the expiration of the additional, mandatory 30 day period after initial publication, the revisions impact three core principles of the ... Read More
Best Practices: Collateral Changes to SBA Loans
So you’ve closed your SBA loan, hopefully in accordance with all SOP requirements, and now you have moved your loan to servicing. It is not uncommon to have borrowers make various servicing requests throughout the life of the loan including substituting, modifying or releasing collateral. What is a Lender to do about these requests? The ... Read More
Best Practices: Documenting 401(k) Funds Used as Equity Injection
When a Borrower wishes to use funds from a 401(k) plan (the “Plan”) as equity injection on SBA loans, lenders must make sure they are properly documenting the injection and that the loan structure remains compliant with SBA rules and regulations. See SOP 50 10 5(I), pages 157 and 158. SBA requires that all individuals ... Read More
Best Practices: Credit Elsewhere Requirements
The SBA’s credit elsewhere test underpins the 7(a) loan program. Accordingly, failure to comply with the SBA’s credit elsewhere requirements may subject a lender to a denial of the SBA guaranty as well as a possible enforcement action by the Office of Credit Risk Management. To comply with the SBA’s credit elsewhere requirements, which appear ... Read More
