SUBMITTING 1502 REPORTS: IT’S ALL ABOUT THE DETAILS!
INCORRECT FILING CAN AFFECT YOUR PARRiS SCORE!!
As with all SBA processes, accurate 1502 reporting is critical to maintaining your portfolio’s performance and a positive PARRiS score. And as with all processes, it’s about the details. An inadvertent error or omission in filing can trigger a negative PARRiS score and affect your PLP status. Guidance on 1502 reporting is a key service we provide at JRB and my area of expertise. Proactivity is your best protection. Here are some common errors we’ve come across and a quick tutorial on what to watch for:
- Critical: File on time. Head off late fees and negative portfolio reviews. Pay careful attention to SBA’s due dates and submit your 1502 Reports to Colson on time. A calendar of due dates for the 2018 calendar year is detailed on SBA Information Notice 5000-17025 dated November 20, 2017.
- Include all loans approved by SBA considers all approved loans as “funded” even those you haven’t yet closed and funded. Loans not funded should include a Status Code 9 notation on the Colson report, designating them as unfunded.
- Verify your contact information. Make sure your 1502 Report has up-to-date contact information so the SBA will contact the correct lending staff in case they have questions.
- Make sure the “Next Installment Due Date” is accurate. Inaccurate due dates can lead to a loan being reported as late when the payment was on time.
- Loans on full deferment. For these loans, which SBA defines as those where a principal and interest payment deferral has been approved, the next installment due date should be the next payment you expect to receive from the borrower after the deferment has ended. If there is only a deferral of the principal payment with an interest payment still due, the next due date should be the next date an interest payment is due.
- Loans approved by SBA, but not closed and/or funded. Report the next due date as the day of the next month a payment should be due as stated in the Authorization.
- Lines of credit with $0 balance. Report the loan with no next payment due date.
Important reminders to keep top-of-mind:
- SBA should send discrepancy reports to your lending department for the following 1502 Report discrepancies. However, SBA depends on your lending department to report an accurate “Next Installment Due Date.
- Interest paid to dates out of sync with SBA’s records
- Principal balances out of sync with SBA’s balances
- Loans not reported when they should be reported
- Loans reported with an inaccurate status code
- According to OCRM, if a next installment due date is erroneously reported as late on a 1502 Report and corrected on subsequent 1502 Reports, the late payment could affect your institution’s overall delinquent loan rating for up to 36 months.