It was crunch time at the CDC. You know crunch time: Gotta get the loan packages over to counsel so we meet the cut-off date for funding. Salesman Gregory was busy all morning taking care of the last minute things Tim, the loan closer required. So when Tim added “one last thing” to the list, Gregory wasn’t happy. Not at all. Greg’s happiness be darned. That “one last thing” was to update a borrower’s Personal Financial Statement for the new loan.

GREGORY. OK! OK!! Give me a blank 413. I’ll transfer the numbers from our borrower’s old PFS to the new one and get her to sign.

Though Gregory’s desk was some distance from my office, I was sure he could be heard two buildings away. Time for me to intervene.

ME. Gregory, if only it were that easy …

I could tell Gregory was thinking, “Here comes Richard throwing a wrench in the middle of a perfectly good solution.”

ME. Yes, she has to sign and date a new PFS because over the last 90+ days, you don’t know how the numbers may have changed from the PFS she gave us last year. So let’s do it the right way. Get her to review, fill out and sign a new Form 413. In the meantime, I’ll get our attorney to give us an extension until tomorrow morning.

GREGORY. OK but it seems like a lot of work to me!

Me.  Phew! Another disaster averted!!

Fast Forward. The loan goes bad. Now, SBA is seeking to recover its deficiency on the loan. Gregory had indeed gone through all that work, grumbling all the way. It was a good thing too. We reviewed the loan, worked with SBA and the borrower, and SBA honored the guaranty. Slam dunk.

Fast Forward #2. The loan goes bad. “What if?”  All that work was too much for Gregory. He’d transferred the numbers from the old PFS to Form 413 for the new loan. On short notice, Gregory had the borrower come in and sign next to the yellow sticky. Well, well. When SBA tries to collect, Poof! Everything falls apart.

When questioned, the borrower said that everyone was in a hurry to meet some kind of deadline. Gregory gave her a whole bunch of papers to sign. She figured he knew more about the loan than she did so she trusted him. Plus he seemed like a nice guy, and she signed what he gave her.

“What if” didn’t happen after all. If it had, Gregory would’ve been called in to sign some papers. His walking papers.

Richard Jeffrey
Senior Associate, CDC/504 Program