eBulletin Archives 2014

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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Perspective on Business Financial Statements
In 2014, in its ongoing initiative to streamline processing, the SBA extended the time a business applicant’s financial statement is valid for SBA loan submission. Under the new SOPs 50 10 5 (F) and 50 10 5 (G), an applicant’s business financial statement must be current within 180 days of application, vs. the prior 120 days.

Credit Reporting for SBA Loans – What’s the Buzz?
In working with SBA lenders across the country, we’re tuned into the current buzz in the SBA lending community. All the buzz: Lenders are talking about the SBA requirement for quarterly reporting of business credit history to business reporting agencies. Let’s get it straight: It’s a requirement. If you’re an SBA lender you must do it. Is this something new? And why all the buzz?

SBA Charge-Off Tabs = Wrap-Up Report For Timely 7(a) Loan Charge-Off Requests
A loan has tanked. You’ve slogged through servicing and liquidation and now it’s clear that the loan has sunk. You’re ready to ask the SBA to reclassify the loan to charge-off status. Submitting a request for charge-off is the last thing you want to do for everybody concerned. And to boot, in the past, you would’ve had to compile a comprehensive Wrap-up Report for submission to the SBA, yet another arduous process.

Servicing and Liquidation Unilateral Authority: Going a Step Beyond
As a lender, handling a loan in servicing or liquidation is one of the last things you want to do. Yet what you thought was a good deal has gone sour. It happens. In its ongoing initiative to make this process easier for lenders, the SBA provides the Servicing & Liquidation Actions 7(a) Lender Matrix as a guide for actions needing SBA approval and those you can take under Unilateral Authority. Importantly, you need document, document, document.

Dealing With The Big Bounce: When SBA 7(a) Payments Come Back NSF: How To Process?
It’s The Big Bounce. A loan payment comes back to your credit union with the dreaded Notice: Non-Sufficient Funds. And you’ve already entered it into your system as paid. What actions do you take? A bounced 7(a) loan payment triggers several critical actions depending on when the payment was returned NSF and whether the loan was sold on the secondary market. You need to get the rebound and handle things right to keep your Form 1502 Reports accurate and ensure the integrity of your SBA portfolio.

You’ve Inherited An SBA Portfolio With Special Asset Loans. What Do You Do? Where Do You Begin?
Special Asset Loan: It sounds like a good thing, but it’s not. As a business lender, you know that “Special Asset” is the term given a loan that is no longer performing and requires special attention. And your financial institution has just inherited an SBA portfolio with a bunch of them. What to do now?

Book Value is Zero. Are You Done?
When a loan is in liquidation, many lenders don’t anticipate getting a recovery. After the SBA has paid the guaranty, the lender issues a Charge Off Tabs to the SBA, writes off their 25% share of the liability, and sends the file to storage. So the book value is zero. Are they done?

SBA Revises SOP 50 10 5 (F) – Streamlines Processes, Loosens Reins on 7(a) Loans $350,000 Or Less
The buzz has been around for days. Now the SBA’s official word is out. In its ongoing initiative to stimulate lending for SBA Small Loans the Agency has issued Procedural Notice 5000-1314, Loan Program Credit Scores, dated June 12, 2014. Effective July 1, 2014, the SBA has updated SOP, 50 10 5 (F). The updated SOP streamlines processes and procedures applicable to credit standards in an effort to put more funds into the hands of business owners.

SBA Loan Repairs & Denials: Cross Your T’s, Dot Your I’s – The Fundamentals
For business lenders, one of the great advantages of making SBA loans is the risk mitigation ensured by the Guaranty. “Protect your Guaranty” is the mantra of SBA lenders – or it should be! As consultants, we continually stress the importance of strict adherence to SBA guidelines – accurate documentation and ongoing monitoring before and after an SBA loan is funded.

We’re Hittin’ The Road! JRB’s Rebecca Mendoza: Panelist SAMA Conference
We’re excited that JRB Associate Rebecca Mendoza will be a guest panelist at the 2014 5th Annual Special Assets Management Association (SAMA) Conference next week. The panel of three will discuss the pitfalls of SBA lending. This organization is made up of financial institution chief credit officers and senior credit officers who actively manage special assets – loans no longer performing that require special handling. Rebecca is our resident expert.

SBA’s National Small Business Week
This month – and for the 51st year – the SBA will celebrate National Small Business Week. Each year since 1963, the president of the United States has proclaimed this week to honor small business owners and entrepreneurs. We got the memo: With half of working Americans either owning or working for a small business, and with small businesses creating two-out-of-three jobs annually – small businesses make our economy tick.

SBA Eliminates Personal Resources Test for 7(a) and 504 Loans, Addresses CDC Operations Requirements
As part of its ongoing efforts to make the SBA lending process easier for borrowers, and to encourage job growth, the SBA has issued changes to the 7(a) and 504 loan programs. SBA posted its Final Rule on Personal Resources, Affiliation and CDC Operations on Friday, March 21, 2014. Most of the rule covers CDC operations requirements. The rule is effective April 21, 2014, except for the amendment to 13 CFR 120.823, which is effective April 21, 2015.

Where Does the Money Go? Recoveries that Require Special Handling
From time to time we come across liquidation recovery issues we call “stragglers” – instances where lenders receive checks in the mail having to do with loans that were closed up to a year and a half before. Now, here’s the money. Where to apply it?

Loss Payee vs. Lender’s Loss Payable Endorsement: Door #1 or Door #2?
As a business lender, your borrower must provide proof of insurance as a condition of your financial institution granting the loan. Now let’s dig deeper. You want to make sure your institution is covered for losses to equipment, machinery and inventory. Two provisions in the borrower’s Personal Property Hazard Insurance policy can cover these eventualities: Loss Payee and the Lender’s Loss Payment Endorsement. For either one, the insurance policy must be properly endorsed and your financial institution properly listed on the policy as the Loss Payee or Lender’s Loss Payee. These are extra items to review, but important ones.

JRB’s Lori McCausland: Strives for Perfection!
From time-to-time, I like to give you a closer look at members of our JRB Team. When we founded J.R Bruno & Associates in 1994, we made it our mission to provide our clients with an experienced, dedicated team of SBA and business lending professionals. I’ve worked with some members of the JRB Team for a cumulative 50 years. And over time, we’ve added to the team.

SBA’s New 10-Tab Submission Tool & Streamlined 7(a) LGPC Submission Process
Now, the SBA has made it easier for lenders to submit 7(a) Loan Guaranty Packages electronically to the SBA’s Loan Guaranty Processing Center using the newly revised 10-Tab Submission Tool. With a goal of reducing processing times, the SBA has streamlined the process for electronic submission and has “cut the fat” from the required paperwork in the 10-Tab format.

JRB: Celebrating 20 Years!
I hope you and yours enjoyed a happy and healthy holiday season. As we round the corner into 2014, I’m looking ahead a couple of months – to March of this year when we celebrate 20 years of continued service to the business lending community. That makes J.R. Bruno & Associates the longest-running consulting firm to SBA and business lenders in the country!

Great News for SBA Veterans Advantage Biz Owners!
The SBA’s Procedural Notice 5000-1299 dated December 18, 2013 brings good news for Veterans Advantage small business owners. Beginning January 1, 2014 and continuing thru September 30, 2014, the upfront guaranty fee for Veterans Advantage Express Loans over $150,000 will be ZERO. Currently, there is no upfront fee for all 7 (a) loans less than $150,000, and a 3% fee for loans $150,001 to $350,000. The ZERO fee is for veteran-owned small businesses only.

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