eBulletin Archives 2015

Business Lending Community ‘Must Reads’

We provide an ongoing stream of articles on issues concerning the business lending community. Articles are in PDF format and you’ll need Adobe Acrobat Reader to view them.

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HEADS UP SBA LENDERS: SOP 50 57 VERSION 2 –
Servicing & Liquidations – Effective December 1, 2015 
SBA has issued SOP 50 57 2 – Servicing & Liquidations containing key changes to 7(a) loan servicing and liquidation policy and procedures. This latest version of the SOP becomes effective on Tuesday, December 1, 2015. Key changes to SOP 50 57 2 are summarized in SBA Information Notice 5000-1358 dated November 24, 2015. They include:

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Celebrate Small Business Saturday, November 28th. ‘Talk Turkey’ to Your Local Small Businesses!
Thanksgiving: a day we give thanks for our blessings and celebrate the one day we don’t think about our diets. Well, not much. On Friday, we shop. Then there’s Small Business Saturday. Celebrated this year on Saturday, November 28th, Small Business Saturday encourages people to “Think outside the big box stores” – and Shop Small.®. Small Business Saturday became “official” with recognition by the U.S. Senate in 2011. On its website, the SBA encourages everyone to join with the agency and organizations across the country in supporting local small businesses.

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SBA 7 (a) LENDERS: WE’LL ALWAYS HAVE PARRiS!
… Coming Soon to the SBA Lender Information Portal

For nearly a decade, SBA’s Lender Information Portal has been the primary channel for the Office of Credit Risk Management (OCRM) to share portfolio performance with 7(a) lenders – and a great tool for lenders to proactively monitor their performance and manage their portfolios. All information is confidential and unique to the institution. Over the years, the SBA has continually upgraded the Portal, enhancing technology and adding new metrics.

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SBA 7 (a) FEE REDUCTIONS = GREAT OPPORTUNITIES FOR LENDERS & BORROWERS!!
As announced in SBA’s Information Notice 5000-1352 dated September 28, 2015, the agency continues to support lenders and borrowers with reduced fees for Fiscal Year 2016. Effective for all 7(a) loans approved October 1, 2015 thru September 30, 2016, schedules for the annual service fee – the ongoing guaranty fee – and the upfront guaranty fee for all 7(a) loans are reduced:

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SBA LENDERS: INTERNATIONAL LOANS – WHY THEY’RE A GREAT DEAL !!
International SBA Loans are a great way you can help small business borrowers expand their export sales, grow your SBA loan portfolio – and increase your bottom line. In short, if you’re not doing them, you’re missing a great opportunity!

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SBA ONE: COMING SOON TO A REGION NEAR YOU… OR TO YOUR REGION!!
It’s here! SBA One – SBA’s one-stop online processing platform – has launched. After more than a year of R&D and much testing and tweaking, SBA One is underway for Region III SBA 7(a) lenders. So lenders in Pennsylvania, Delaware, Maryland, West Virginia and Washington, D.C. have first crack at the system that will roll out in waves over the next weeks and months.

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SETTING UP A NEW SBA DEPARTMENT? CONSIDER ALL YOUR OPTIONS!
As consultants, we often receive calls from lenders looking to set up SBA departments. In many cases, the caller has been charged by executive management to establish an SBA department ASAP. Everyone familiar with us knows that we have long touted the advantages of SBA lending. As a lender, the SBA-backed guaranty mitigates your risk and increases your opportunities to realize solid income. And importantly, offering SBA products makes your bank more diverse and opens new opportunities you might not have had.

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FOLLOWING UP: HERE’S THE IRS SIGNATURE TITLES LIST!!
Thank you for contacting us regarding our Form 4506-T eAlert. In response to several requests for the list of signature titles the IRS requires, click here for the title list for your convenience.

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COMPLETING FORM 4506-T: GETTING IT RIGHT
WHAT’S HOLDING UP THE SHOW?

SBA has issued Important Update: IRS 4506-T a guide to SBA lenders in processing tax return transcripts they get from the IRS. The message: SBA lenders, make sure your borrowers fill out the form correctly so the IRS can send the transcripts to SBA for you to verify. Sounds simple. Yet processing has been slow going.

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SBA IS ‘SPRING CLEANING’ – OCRM TAKES LENDER REVIEW PROCESS ONLINE
Over the past weeks, some clients have told us they’ve received a PARRiS Analytical Review (PAR) Notification Letter from the OCRM alerting them to a Risk-Based PAR Analytic Review of their institution. As recently as last year this type of letter was issued because the SBA had noted red flags in the loan portfolio and was informing an institution of a dreaded upcoming on-site review. In response, there might be a flurry of in-house activity in anticipation of OCRM staff descending on the lender.

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‘ARE YOU ON MATCH?’ SBA’S LINC PUTS LENDING PARTNERS TOGETHER NATIONWIDE
SBA’s new online matchmaking tool connecting small business owners with SBA lenders has rolled out across the country. At this month’s NAGGL Conference in San Antonio, I heard keynote speaker SBA Administrator Maria Contreras-Sweet announce the major expansion of Leveraging Information and Networks to Access Capital (LINC). The announcement was an opportunity to spread the word during the administrator’s nationwide tour for National Small Business Week.

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HEADS UP, SBA LENDERS: SOP 50 10 5 H JUST RELEASED!!
SBA has released SOP 50 10 5 H, Lender & Development Company Loan Programs, which is effective as of May 4, 2015. This latest update applies to all loan applications SBA receives on or after the effective date.

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UCC FILINGS: IT’S LOCATION. LOCATION. LOCATION.
“Location, location, location.” There’s a reason we say it three times. Location is important. We all know that choosing the wrong location can mean profit or loss, whether buying a home or establishing a business. The same goes for your institution when securing commercial UCC-1 liens. Filing UCC-1 Financial Statements in the wrong locations can come back to haunt you – and cost you.

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SBA’S SMALL BUSINESS WEEK – IT’S NEXT WEEK!
PUBLIC EVENTS, WEBINARS, SOCIAL MEDIA… AND MORE!!

SBA is celebrating National Small Business Week for the 52nd year. Each year since 1963, the president of the United States has proclaimed this week to honor America’s small businesses, owners and entrepreneurs. We got the memo. More than half of working Americans either own or work at a small business, and small businesses create two-out-of three net, new jobs each year.

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COMING TOGETHER FOR CREDIT UNION SBA LENDING
IN THE CU NEWS: SBA, NCUA, NAFCU, CUNA ALL ON!

As a longtime advocate of credit union SBA lending – for the benefit of your local economies and your own bottom lines – I’m gratified by the spate of agreements over the past weeks and months between SBA, NCUA and the various credit union trade organizations. The upshot: They’re unified in their efforts to expand your programs or get you on board!

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FORM 1149: It’s Optional But Chances Are… You Need To Keep Using It!
If you subscribe to SBA’s Information Notice service, you should have already received SBA Information Notice 5000-1338 effective March 23, 2015. This Notice lets SBA lenders know that the OMB has given lenders the green light to continue using SBA Form 1149 Lender’s Transcript of Account – which has been updated with revised instructions. While the older versions still are on the SBA website, they’re obsolete. This latest edition has a January 31, 2018 expiration date.

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Site Visits Play Multifaceted Roles
As part of our comprehensive training to new SBA and business lenders, we discuss the many roles site visits play in the process. While the SBA requires Post Closing site visits only when a loan is in default, as a “Best Practice,” we recommend that lenders do them annually, even for loans in good standing.

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What’s An SBA LSP Agreement?
Before we get to the Agreement, let’s define “Lender Service Provider.” As detailed in SOP 50 10 5(G), Lender Service Providers fall under the category of “Agent.” Specifically, “… a ‘Lender Service Provider’ means an Agent who carries out lender functions in originating, disbursing, servicing, or liquidating a specific SBA business loan or loan portfolio for compensation from the lender.”

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Choosing A Loan Review Provider: Doing Due Diligence
In working with clients and in our eBulletins we have continually underscored that it doesn’t work to simply close loans and put them on the back burner. Ongoing loan servicing and portfolio management are critical to a successful SBA and business loan program. If your bank decides to outsource to a loan review provider – or for that matter any external resource – the selection process is equally critical.

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Heads Up SBA 7(a) Lenders: You Gotta Take The ETran!
The Matrix Version 10 Puts Some Unilateral Actions On The SBA Express

“Take the ‘A’ Train.” Way back when, jazz great Duke Ellington gave directions to his composer/arranger that the new “A” subway was the fastest way to get from Brooklyn to his house in Harlem. The result was a jazz classic. As an SBA lender, the E-Tran has been the fastest way to get information to the Agency for some time. Now, expanded use of E-Tran puts certain unilateral servicing and liquidation actions on SBA’s electronic expressway.

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Franchise Lending Is Growing…. In 2015: It’s Time to Jump In!
It’s been a while since we’ve updated you about the franchise lending world. And the news is good. According to leading franchise analysis and advisory firm FRANdata, franchise lending has been growing steadily and is trending upward for future growth. We’re longtime supporters of franchise lending and with good reason: Franchise lending gives you an opportunity to grow your loan portfolio, help people run their own business, and stimulate the economy – all with the mitigated risk franchise loans offer.

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Credit Reporting Requirements for SBA Loans
We’re Following Up: Closing The ‘Black Hole’

In a November eBulletin we alerted you about the long-standing federal requirement for quarterly reporting of business credit histories to credit reporting agencies for all SBA-guaranteed loans. We noted that Debbie Golbach, Vice President, Business Development for Business Credit Reports, estimates that more than 80% of SBA lenders aren’t fulfilling the requirement.

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