Awhile back I wrote to you about SBA Procedural Notice 5000-825230, which became effective on July 29, 2022.* From the length of its title, you might have thought I was giving you the latest news about the Pythagorean Theorem. No. No.
Importantly. this Notice has nothing to do with the length of the hypotenuse of a right-angled triangle. SBA Procedural Notice 5000-835230 “Guidance on 504 Appraisal Review to Update SOP 50 10 6 and Authorizing CDC Closing Counsel to Confirm Franchise Closing Documents Conform with SBA Franchise Procedures and the SBA Franchise Directory” contains provisions that if not followed, could affect funding for 504.
I recently learned that some lenders are not yet implementing the requirements of this Notice. I certainly understand why that could be: It takes considerable time to read the title of the Notice. So you’d think reading the whole thing would be an intimidating task. Yet as I noted, the whole thing is just two pages long. An important two pages.
Notice 5000-835230 is important as it affects the timing of loan funding, setting the interest rate, and getting the CDC its fees. So, in a nutshell:
In connection with the new closing procedures, SBA has revised Appendix D of SOP 50 10 6, relating to the opinion of counsel. The provisions of the Notice were effective immediately upon its issuance, as in slam on the brakes and drop what you’re doing, and they apply to all loans, not just those involving franchises. The revised procedures can be viewed in their entirety in SBA Procedural Notice 5000-835230.
Your counsel has been provided with the new Opinion of Counsel form which replaces the one in Appendix D of the SOP. Counsel must use the correct version for a loan to close so that you, the borrower, the third party lender and any other parties involved can receive their funds.
Avoid being the reason funding was delayed! Make sure your attorney is using the updated Opinion of CDC Counsel with the footer of 8-2022.
*FROM RICHARD @ JRB … ABOUT LTVs AND LEGAL FEES – FOREWARNED IS …. WELL YOU KNOW! runs on JRB’s website NewsTicker