Best Practices: Failure to Request 1112 Payments Could Jeopardize Your Guarantee
On July 28, 2020 SBA issued Procedural Notice 5000-20041 (“PN 20041”) which provides additional guidance to Lenders on implementation of Section 1112 of the CARES Act. Section 1112 provides a subsidy for 6 months’ worth of payments for every SBA 7(a) and 504 loan in its portfolio, as well as every new loan originated and fully ... Read More
Best Practices: What Should You Do With Your PPP Loans?
This year has brought a lot of uncertainty and SBA lending is no exception. The Paycheck Protection Program (“PPP”) expired on August 8th, and the SBA’s loan forgiveness portal opened up on August 10th, and yet Lenders continue to wait and wonder what will happen with PPP and forgiveness as Congress debates another economic stimulus ... Read More
Best Practices: Lenders Need to Work Closely with CDCs to Avoid 504 Loan Approval Delays
Third Party Lenders participating in the SBA’s 504 Loan Program should become familiar with new, specific matters that must be included in a CDC’s financial analysis of the borrower and documented in the CDC’s credit memorandum, for all loans made during the COVID-19 emergency through at least December 31, 2020. In SBA Procedural Notice 5000-20040, ... Read More
Best Practices: Making Sure Your Credit Memos are Audit Ready
While a credit memorandum may primarily be a way for lenders to memorialize their own underwriting of a loan, it is important to keep in mind that this document is one of the primary documents that SBA reviews to ensure that a lender is in compliance with SBA 7(a) regulations. SBA’s compliance audits of loan ... Read More
Best Practices: SBA 7(a) Loan Closings and Disbursements During COVID-19 Economic Times
Although businesses across the country have been affected by the COVID-19 pandemic, many lenders have recently shifted focus from making PPP loans to again making SBA 7(a) loans. Many lenders are financing construction projects, start-up businesses, real estate purchases and business acquisitions, but lenders should be mindful of adverse change considerations when extending these loans ... Read More
Best Practices: Increasing Loan Defaults require Prudent SBA Lenders to Pivot Staffing from PPP to Monitoring of their 7(a) loan portfolios
With no end in sight to the COVID-19 pandemic, SBA lenders would be wise to address the rapidly rising number of small business loan failures. While the SBA has been providing Section 1112 debt relief since April, these payments are scheduled to end in late September, forcing lenders to examine stressed loan portfolios. It is ... Read More