eBulletin Archives 2016

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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OUR NAGGL CONFERENCE TAKE-AWAYS: WRAPPING UP SBA OVERSIGHT – HOT BUTTON ON THE HILL
As promised – and responding to requests from several lenders – here’s more info about the increased D.C. oversight of SBA covered at last month’s NAGGL Conference. Why the step-up? According to SBA’s Office of Credit Risk Management (OCRM), 70,000 SBA loans totaling $29 billion were booked in FY 2016, with an estimated $3 billion dollar volume increase year-over-year. So thanks to the great job SBA lenders are doing, there’s need for assurance that current oversight is commensurate with the rate of growth.

NAGGL ANNUAL LENDERS CONFERENCE: OUR TAKE-AWAYS
NAGGL’s Annual Lenders Conference has always been a forum for SBA lenders, lender service providers and SBA leadership to discuss key issues affecting the SBA lending community. Discussions at this year’s Conference held October 31- November 2 in Scottsdale, Arizona focused on many substantive and important issues.

CELEBRATE SMALL BUSINESS SATURDAY NOVEMBER 26th
Think Big. Shop Small.® Promoting Small Businesses Helps Your Business. 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 26th, Small Business Saturday helps kick off the holiday shopping blitz. Shopping small: What a great way to stimulate your local economy – and to walk off calories from Thanksgiving dinner!

SBA ONE: SO HOW’S IT GOING?
First, an update: SBA One*- SBA’s streamlined online portal for 7(a) loan processing – has been mandatory since October 1 for all loans processed as non-delegated loans. If you’re a PLP lender, you must now submit all non-delegated packages through SBA One. For delegated applications, SBA recently announced that these apps can still be submitted through Etran.

NAGGL’S ANNNUAL SMALL BUSINESS LENDING CONFERENCE
NAGGL’s Annual Small Business Lending Conference has long served as a definitive gathering place for small business lenders, lender service providers and SBA leadership. This year’s conference at Scottsdale’s Fairmont Scottsdale Princess will be jam-packed with educational opportunities, breakout sessions on trends in small business lending and updates on legislative and regulatory issues.

LOAN REVIEWS SPOTLIGHT SBA PROCESSES & PROCEDURES
As we’ve discussed in recent JRB eBulletins, loan reviews often reveal breakdowns in a lender’s policies and procedures. In the ever-evolving world of SBA lending, it can happen. And it’s a cascading effect. For instance, an updated SOP can trigger the need for a raft of changes in your policies and procedures.

SBA LENDERS: NEW SBA 7 (a) & 504 FEES EFFECTIVE 10/1/16
Quick reminder: Concurrent with SBA’s new fiscal year effective next month, SBA Information Notice 5000-1389 dated September 16, 2016, announces the 7(a) and 504 loan fee schedule for Fiscal Year 2017. For details, please read the entire Information Notice.

TRAINING: ABCs OF SBA ARE THE FOUNDATION OF SUCCESS
At J.R. Bruno, lending department staff training has been a mainstay of our service to the SBA and business lending community since our beginnings 22 years ago. In fact, training has been such an integral part of our service that we haven’t talked much about it. So fine. Let’s talk about it.

LOAN REVIEWS: A HOT TOPIC – HERE’S WHY!
In working with SBA and business lenders across the country, questions about the need for loan reviews have come up again and again. As a lender, you have reason to be concerned – and to consider annual portfolio reviews to make sure you’re prepared for all contingencies. Here’s a recap of the reasons for the increased focus on loan portfolios along with the answers to common questions we’ve come across:

AMERICA EAST SBA LENDERS CONFERENCE. PHILADELPHIA MARRIOTT DOWNTOWN · AUGUST 24-26, 2016
The America East Conference is a great opportunity for SBA lenders to network with peers, meet SBA officials, take advantage of NAGGL training, and get the latest updates from industry experts. This year we’re meeting in downtown Philly, with a conference schedule including more than 40 speakers and over a dozen breakout sessions on “hot button” SBA topics.

J.R. BRUNO PROMOTES LORI MC CAUSLAND TO SENIOR ASSOCIATE. JRB + LORI + CLIENTS = A LOVE/LOVE RELATIONSHIP
We’re proud to announce Lori McCausland’s promotion to JRB Senior Associate! Lori has been an asset to our team since joining us as an associate four years ago. With more than 25 years of commercial lending experience, she came to JRB having held management positions at several national, regional and local banks. Much to her credit, Lori has handled the transition from long-time financial institution employee to entrepreneurial consultant with great success.

GREAT BASIN FEDERAL CREDIT UNION: SMART OUTREACH … GREAT MBL!
From time-to-time we come across a credit union with an MBL marketing strategy we believe is worth sharing. Want to increase business community goodwill and your SBA/MBL portfolio at little or no cost? Great Basin Federal Credit Union in Reno, Nevada is doing all that. Read on!

SBA CLARIFIES AFFILIATIONS FOR SBA ELIGIBILITY …IT’S ALL ABOUT CONTROL, CONTROL, CONTROL!
A new SBA Rule effective July 27 clarifies what constitutes “control” in determining small business and franchise affiliations for SBA loan program eligibility. In many ways, the new rule helps open the door to SBA lending for small business owners and franchisees.

CU CONFERENCES: ANNUAL STRATEGIC LENDING CONFERENCE
NIAGARA FALLS, ONTARIO, CANADA· JULY 20-24
If you know J.R. Bruno & Associates, you know we’re long-time advocates of credit union SBA lending. So we’re delighted that CU Conferences invited us to give a presentation on “The Advantages of an SBA Lending Program” at its Annual Strategic Lending Conference, July 20-24.

OIG AUDITS & FINDINGS: WHAT WE CAN LEARN
Office of the Inspector General
MISSION: To conduct independent audits, inspections, evaluations, and investigations to promote economy and efficiency and to prevent and detect waste, fraud, abuse, and mismanagement in the programs and operations of the Department and the Broadcasting Board of Governors.

SBA’S UPDATED SOP 50 57 2: OUR PERSPECTIVE. ROUND 3 – ‘IN EFFECT AT THE TIME THE LOAN WAS APPROVED’
The SBA’s updated SOP 50 57 2, effective since December 1, 2015, has significant changes, clarifications and modifications to the agency’s Servicing and Liquidation Policies and Procedures. In this third look at key changes to the SOP, we’re highlighting an important clarifying phrase the SBA added to several sections which puts a more concrete requirement on certain lender actions

JRB: CELEBRATING 22 YEARS! PROMISES KEPT. AND MILES TO GO!!
We’re celebrating a significant milestone at JRB: 22 years of continued service to America’s business lending community. That makes J.R. Bruno & Associates the longest-running consulting firm to SBA and business lenders in the country!

SBA’S UPDATED SOP 50 57 2: OUR PERSPECTIVE. ROUND 2 – DEADLINES & REPORTING REQUIREMENTS
The SBA’s updated SOP 50 57 2, effective since December 1, 2015, has significant changes, clarifications and modifications to the agency’s Servicing and Liquidation Policies and Procedures. In many cases, SBA is tightening the strings around when 7(a) lenders must complete liquidation activities and submit their reports. Important stuff. Significant consequences. This is the second in our series reinforcing existing requirements and highlighting key changes from our perspective.

GETTING THE ‘RIGHT READ’ ON A FRANCHISE BRAND. FRANdata’s Tools for More Accurate Credit Risk Analysis
Good news for franchise lending. According to leading franchise analysis and advisory firm FRANdata, franchise lending is growing and is trending upward. We’re longtime supporters of franchise lending. Here’s why: With franchise lending you can grow your portfolio, help people run their own business, and stimulate the economy – all with the mitigated risk franchise loans offer. As a lender, how can you get an accurate “read” on franchise risk potential? We spoke with FRANdata President Edith Wiseman who walked us through the challenges, data and available resources.

SUPPORTING SBA IN MAY: NATIONAL SMALL BUSINESS WEEK MAY 1-7… NAGGL LENDERS TECHNICAL CONFERENCE MAY 2-4
SBA’s Small Business Week: Dream Big. Start Small. That’s what SBA is talking about! National Business week kicks off May 1 & 2 with award ceremonies in Washington, D.C. where SBA Administrator Maria Contreras-Sweet will honor outstanding business owners from across the country. Then, she’ll headline special events in Atlanta, Denver, and Phoenix – wrapping up the week at California events in San Jose, and Oakland. There also will be events throughout SBA’s 10 Regions and 68 Districts all week. For updates and activities in your area, check out www.sba.gov/NSBW.

HEADS UP: NCUA’S MBL FINAL RULE PHASE 1 –
PERSONAL GUARANTEE REQUIREMENT GOES AWAY APRIL 29!
Credit Union Business Lenders: Your MBL door is opening wider. When the NCUA Board unanimously approved its MBL Final Rule back in February, outgoing Chairman Debbie Matz called it a “new era” for NCUA as a regulator and for credit unions as business lenders. The rule hadn’t been updated significantly since 2003. It was time.

HEADS UP SBA LENDERS: SBA ONE WILL BE MANDATORY!!
SBA’s Big News: Use of SBA One – SBA’s soup-to-nuts online portal for 7(a) loan processing – will become mandatory for all General Partner (GP) loan submissions to the Loan Guaranty Center by Delegated Lenders on July 31st for non-delegated loans, and for Non-Delegated Lenders on September 30th. Here’s more info the SBA wants you to know as of the agency’s communication issued on March 21, 2016:

SBA’S SMALL BIZ POOL JUST GOT BIGGER!
‘Small Business’ Definition Expansion Opens Window to More SBA Loans
The window of opportunity for SBA loans just opened wider with SBA’s recent changes to the employee-based size standards for several industry categories. As announced in news releases posted on January 27 and 28, 2016, SBA has revised the size standards for certain sectors of the Manufacturing, Wholesale Trade and Retail Trade, and other industry sectors. These changes took effect just weeks ago – on February 26, 2016.

NEW: SBA ONE ENHANCEMENTS!!
Streamlined Enrollment & Key Updates Make Things Easier – Better Read Up!!
Just in! SBA One* – SBA’s soup-to-nuts online portal for 7(a) loan processing – just got better with enhancements effective Monday, February 29th. Since launching a year ago, SBA has solicited lender feed-back on making SBA One even better. SBA listened. The latest enhancements include a new, streamlined enrollment process and updates throughout.

SBA’S UPDATED SOP 50 57 2: 7(a) LOAN SERVICING AND LIQUIDATIONS … COMMENTS FROM OUR PERSPECTIVE
The Small Business Administration’s updated SOP 50 57 2, effective since December 2015, has many significant changes, clarifications and modifications to SBA’s Servicing and Liquidation Policies and Procedures. From time-to-time, we’ll highlight and comment on specific sections from our perspectives as consultants. Two definitions in the SOP – Prudent Lending, and Prudent Servicing – set the tone for the document.

DENYING SBA & BIZ LOAN APPLICATIONS … TIMELY RESPONSE IS KEY: HAVE YOUR COMMUNICATIONS READY!
In working with credit union clients that are new to business lending, we’ve advised several that in addition to consumer protection, Regulation B also applies to business loans. The NCUA’s Office of Consumer Protection Fair Lending Guide spells it out:

REFINANCING SBA LOANS CHAPTER 2: REFINANCING SELLER DEBT
Here’s the second in our series on refinancing SBA loans. We’re looking at what needs to happen when the seller carries back a portion of the financing as part of a change of ownership – what’s commonly referred to as “Seller Debt” – or debt owed to the seller.

REFINANCING SBA LOANS CHAPTER 1: REFINANCING DEBT AS RELATED TO SBA’S ‘CREDIT ELSEWHERE TEST’
As promised, we’re taking a look at the thorny issue of refinancing SBA loans. First up: Refinancing existing debt as related to the “Credit Elsewhere Test.” In a previous eBulletin, we discussed that the language defining Credit Elsewhere calls for clarification:

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