Today’s Hot CDC/504 News. SBA has issued the Interim Final Rule for the Accredited Lenders Program (ALP) Express Loan Authority. With that, the ALP Express Loan Program has begun. If you say, “Oh yeah. The ALP Express. Huh?” you’ve probably forgotten that the regs were under development for months. Let me refresh your memory:
What’s ALP Express Lender? Search through the nearly 600-page SOP, and you won’t find the ALP Express. Yet beginning on page 74, there’s a precise description of the ALP lender: one having increased authority to process, close, and service 504 loans, and expedited processing of loan approval and servicing actions. Sounds pretty good. (SOP 50 10 6 Section B. Chapter 1, C, 2, pgs. 74-76)
How to be an ALP? The process begins with being designated by SBA as a Priority CDC. That requires the Lead District Office nominating the CDC based on its history of presenting complete and accurate closing packages. OFA considers comments from OCRM and the Servicing Center and makes the final decision. ALP status is given generally for a two-year period which may be renewed, or cancelled if the CDC fails to meet ALP guidelines.
And that’s it. Once a CDC attains ALP Status, it has Express Loan Authority: the CDC makes the final decision on the creditworthiness of the applicant, notifies SBA and provides the documentation required by SBA in 13 C.F.R. § 120.842(b)(4)). SBA reviews the application to determine eligibility, including:
- requirements for franchise or similar agreements;
- historic properties;
- properties with environmental issues;
- businesses involving religious activities; or
- businesses with activities of a prurient nature.
If SBA determines that the ALP Express Loan is eligible and funds are available, the Agency will issue a loan number and a signed copy of the Authorization. And off you go! You have a 504 Loan to close!! You, the CDC, will issue your own No Adverse Change certification and your CDC counsel provides its Expedited Closing Checklist.
Before you rush in. Couple of caveats and a reminder:
- SBA has yet to identify those servicing actions that can be approved unilaterally under SBA Express.
- The 504 Express Loan program is temporary and expires September 30, 2023.
- Only those loans under $500,000 and not made to a Borrower in an industry with a high rate of default, as defined by SBA are eligible. As of today, SBA has not yet identified industries with a high rate of default.
Watch for an SBA ALP Express Guide in the future. And I’ll keep you posted as issues arise.