SBA emailed me a handy dandy metric the other day. It had to do with the First Pass Approval Rate (FPR) the SLPC was assigning to 504 loans. Wow! I admired the seeming transparency and looked forward to the day when even the metrics of the SBPS Score would be revealed. With my favorite drink in hand, I sat back to dedicate the afternoon to absorbing the metric. No need. The calculation couldn’t have been simpler. Easy peasy:
- Loans approved without a screen out PLUS
- Loans approved with avoid-a-screen-out after the CDC response was submitted DIVIDED BY
- Number of loans submitted
Nothing esoteric here. I communicated all this to a CDC loan officer in a phone conference later that day.
“But wait,” he said So of course, I waited.
Larry Loan Officer. My loan was screened out but I submitted a response and got it approved. Doesn’t that count?
ME. You can count it as an approved loan, but not as a “first pass approval” which of course is the name of the game.
Larry. how about the loan I submitted to SBA 16 days ago but still haven’t heard back? Does that count?
ME. Dude. We’re talking about loan approvals here, not loans submitted.
The FPR (a new acronym for our SBA quiz!) for your CDC will be determined at the end of each quarter based on loans decisioned during the prior 12 months. The OCRM uses the FPR as a review metric when approving or renewing an ALP application. An FPR of 55% is considered minimally acceptable in approving or renewing CDC applications for ALP status. At the recent NADCO Spring Summit it was reported that the current FPR is 67%.
Now you know how to calculate your own FPR. I hope it gives you a warm, cozy feeling. If not, well … you know WHOM to call!
Richard Jeffrey
Senior Associate, CDC/504 Programs
richard@jrbrunoassoc.com