Well it’s here. SBA’s SOP 50 10 5 (K) is effective as of April 1, 2019. It’s loaded with changes, updates and clarifications. Many provisions are new and many are reinforcements of changes already incorporated into SOP 50 10 5 (J). We’ve scoured the new SOP for provisions we believe are most important for you to keep in mind. Here’s a recap:
Ineligible Types of Businesses. SBA has updated submission procedures regarding eligibility issues for several categories of business: (Subpart B, Chapter 2, III. Ineligible Types of Businesses)
- Business Engaged in Promoting Religion. SBA has unified the review processes for all lenders. “Prior to submitting an application to the LGPC (non-delegated) or requesting a loan number (delegated), the Lender must submit the completed worksheet and supporting documentation to the Associate General Counsel for Litigation atForm1971Review@sba.gov for a final Agency decision on eligibility” (A. 12. pg. 109)
- Businesses with an Associate of Poor Character. SBA 912 Form Package Clearance Process: some changes to the submission process and the documentation required if court documentation is unavailable. (13. d. i. a.-f. pgs. 110-114)
- Business Providing Prurient Sexual Material. SBA has revised the submission process for these businesses. (15. pg. 114)
Export Express. SBA has instituted new requirements for Export Express, among them a provision that lenders must now check both the Exim Bank’s Country Limitation List and the Department of Treasury OFAC Sanctions List.) It’s likely you already do this, since Federal Regulations on OFAC are well engrained in our industry, however, SBA has now included it in their requirements. (Subpart B. V. Eligible Uses of Loan Proceeds, 3. pg. 143)
Leasehold Improvements are now limited to a 10-year maturity. Lenders may add a reasonable period for completion of the improvements, however that period cannot exceed 12 months. (Subpart B. Chapter 3. D. pg. 148).
IRS Verifications are now required of all lenders regardless of designation before the first disbursement of funds. This is a change for PLP lenders. Under previous SOPs, PLP lenders were allowed to fund. but were required to verify and halt funding or cancel loans if discrepancies were found that could not be remedied. (Subpart B. Chapter 5. D.1. IRS Tax Verification of Financial Information pgs. 218-219).
Now, 100% of the Applicant’s ownership must be disclosed on Form 1919, and entered into ETran or SBAOne. This is an inclusion of requirements we’ve seen for some time in both ETran and SBAOne. Yet now lenders will need to obtain information on even the smallest minority owners – down to even 1% ownership of the business. (Subpart B. Chapter 6, Loan Authorization, I. Submitting an Application for Guaranty. pg. 221)