I just came back from the NADCO Spring Summit in Washington, D.C. If you weren’t there, you missed a lot!  Everybody’s in the neighborhood, so Spring Summit is our best chance to hear directly from SBA’s leadership team, get updated on program changes and to offer feedback on how to improve SBA lending. It’s also an opportunity to meet congressional representatives and staffs, to share our success stories, and discuss program enhancements. And of course, there’s great networking – a chance to meet leadership of other CDCs, swap stories, maybe learn how they’re organized, or to hear how they processed those unique loans we always see.

GETTING SMART. This was the best attended Spring Summit in many years, and while there were many cheery topics covered, one of the more interesting had to do with OCRM’s report of its findings from SMART reviews. SBA wants to know if your CDC’s s lending goals are Smart, Achievable, Relevant and Time-Sensitive. So how SMART are you? If you haven’t had a SMART Review in the last four years, you’re DUE.

GET SMART BEFORE SMART! As you eagerly await the letter saying you’ve been selected for a SMART review, here are OCRM’s top findings from recent SMART reviews. GET SMART. Go over these lists and use them as checklists before your next SMART review. And be sure you can mark “DONE” for each item.  You can reduce OCRM findings by taking care of these issues NOW:


  • Board review of risk rating changes at least semi-annually.
  • Make sure your Internal Control Policy is compliant.
  • Demonstrate that you can sustain operations continuously with reliable sources of funds and reserves
  • Submit Statements of Personal History (SBA Form 1081) for new Board members
  • Provide SBA access to, and copies of, any work papers, policies, and procedures relating to the services performed in your audit engagement letter
  • Include the CPA’s letter to management of internal control weaknesses, or lack of weaknesses, in an audit report
  • Conduct an independent loan review
  • Have appropriate controls in place related to loan approvals
  • Review requirements for Designated Attorneys and make sure you are meeting them.
  • Maintain your D&O and E&O insurance coverage


  • Inadequate documentation of hazard insurance
  • Risk rate loans at origination and on an annual basis thereafter
  • Perform key person risk assessment and determination of life insurance
  • Obtain flood insurance coverage at closing with the proper endorsements
  • Perform and document required site visits
  • Get IRS tax transcripts at closing and show you reviewed them
  • Document in the Credit Memo that proposed debt refinancing satisfies requirements
  • Document Liquidation Plans within 30 days of repurchase
  • Submit debenture purchase requests to SBA for loans more than 90 days past due.
  • Document borrowers’ use of proceeds

If you need assistance in preparing for your SMART, let me know. JRB is here to help you build your capacity.

Richard Jeffrey
Associate, CDC/504 Programs