“The time to repair the roof is when the sun is shining.”
― John F. Kennedy
JFK had a point there. Drip. Drip. Drip. It’s a little late to fix the roof when there’s water on the ceiling. By the same token, it’s time to schedule your annual loan reviews in preparation for yearend planning. It’s important for your board of directors and executive management to know the quality of your loan portfolio. And at the same time, you’ll want shore up any deficiencies so you and your team aren’t running around with buckets at yearend.
Yet in working with clients across the country, we’ve sometime seen a sunny day outlook regarding loan reviews. Everything’s going well, and loan reviews head for your “pending” files while other priorities command your attention. Until it’s almost too late. Before you know it, the roof is leaking. You have stacks of pending reviews and little time to meet your yearend goals and complete your reviews.
Why are loan reviews important? With OIG’s increased monitoring of SBA’s repurchases of guarantees, the last thing you want is to have examiners come in and find a concern that should have been addressed during your annual loan review. That’s why it’s important to proactively address any issues SBA identifies as the top reasons for repair/denial of the guaranty and any concerns identified in OIG’s report findings.
Dig into those “pending” files. Plug any leaks. Now’s the time to dig out those loans, plug any leaks – and conduct your reviews. An annual review of your portfolio will give you added peace of mind. Among other benefits, you’ll be better able to:
- maintain handle on your policies procedures to ensure they comply with the latest SBA requirements;
- identify weaknesses in your processes and procedures that may require additional training;
- gain time to correct deficiencies instead of finding out at repurchase that you have deficiencies that can lead to repair or denial of the guarantee.
It’s a Big Job. All SBA loans and commercial term loans secured by real estate require an annual review to make sure all necessary information is obtained and reviewed to provide timely identification of problem assets and to establish adequate Allowance for Loan and Lease Losses. Required information includes updated financials, personal and business tax returns, rents rolls, collateral evaluations, insurance and site visits.
As always, our JRB Team is here to perform your loan reviews. We’ll conduct a thorough loan portfolio review, check your tickler reports to ensure accuracy, and in some cases perform site visits. So don’t let those loans pile up until everything spills over! Contact JRB.