Join us in welcoming Lisa Lerner to our JRB family of consultants. Lisa’s more than 30 years of experience in commercial and SBA lending ranges from consultant to small-to-mid-size lenders to managerial and executive positions at major national banks. Her executive positions include oversight of national and regional SBA loan processing centers as vice president, national operations manager, and assistant vice president, regional loan closing manager. Her areas of expertise include business development and analysis, commercial and SBA loan eligibility and credit review, documentation, processing, servicing, and training lending teams of all sizes. Lisa Lerner will be writing regular JRB eBulletins: “From Lisa @ JRB …”
Lace up your running shoes. We’re all sprinting to keep pace with the spate of SBA Notices and guidance released in the past weeks. They’re coming fast and furious. Expect more. In part, SBA is racing to keep pace with lenders across the country who raised issues the Agency hadn’t anticipated. It’s important to keep SBA in the loop. As issues arise in your operations, continue to contact SBA to help ensure that everybody stays on track. That said, let’s look at some of the more significant provisions in this latest bundle of Notices.
Biggest Impact. My Take. In an effort to increase SBA lending and stimulate the economy, the Agency is giving you a big break. Several big breaks. To recap:. SBA Information Notice 5000-20084 implements 7(a) modifications passed into law in December. By far, the provision most affecting 7(a) lenders raises the Guaranty to 90% for most programs and to 75% from 50% for Express Loans $350,000 and under through September 30, 2021. Guarantees will revert automatically to previous levels on October 1, 2021. For Express Loans greater than $350,000, the Guaranty will remain at 50%.
More good news from 5000-20084. For SBA Express Loans, the $1 million maximum loan amount provided for in Section 1102(c) of the CARES Act is extended through September30, 2021. The maximum loan amount will change permanently to $500,000 on October 1, 2021. SBA will monitor appropriations and provide guidance as needed.
New 7(a) loans approved by SBA from December 27, 2020 to SBA’s fiscal year end on September 30, 2021 will have no GUARANTY FEE. SBA will refund fees paid after December 27, 2020. What’s more, the annual service fee/ongoing guaranty fee is also reduced to zero for this time period.
And all the rest. Here’s a quick rundown of provisions in the flurry of key SBA notices issued as of this writing:
- SBA Procedural Notice 5000-20083 provides PPP platform procedures for addressing unresolved issues on borrower first draw PPP loans.
- SBA Information Notice 5000-20086: No need to write informational letters to your 7(a), 504 and Microloan borrowers qualifying for CARES Act Section 1112 debt relief. SBA did it for you. Notice 5000-20086 restates that all debt relief payments are subject to availability of funds. SBA’s letter recaps who is eligible for debt relief and how many months are allowed. It’s a good idea to follow up with your borrowers.
- SBA Procedural Notice 5000-20087: 7(a) lenders don’t need to file eForm 1099-MISC with the IRS or furnish this form to the small businesses that received Section 1112 payments.
- SBA Procedural Notice 5000-20089 extends previous guidance on acceptable signatures for the 7(a) and 504 programs through April 30, 2021. In brief, eSignatures are allowed and guidance for scanned signatures is provided.
A few PPP reminders. Must-haves that will save time and trouble down the road:
- Borrowers/applicants must initial and check all the boxes on all certifications.
- Signatures are required on all financial information provided to the lender that documents the 25% reduction in gross revenue (requirement for second PPP application).
- Imperative: Proof that the business was in operation on and before February 15, 2020.
Yes, we’re in the race. It’s just February, so we’re at the starting gate. I’ll continue to keep you apprised of the issues as they roll out, and to share my thoughts. Keep on running and stay safe.
email@example.comNote: All links go to SBA’s website.