You know me. I’m always good for a literary reference. According to Alfred, Lord Tennyson, springtime brings out the best in us. To paraphrase: In spring, the thoughts of young people lightly turn to love. For 504 lenders, springtime thoughts turn to addressing the continuing spate of loan applications pouring in on the heels of the CARE Act. NADCO’s May Spring Summit gave us fodder for clear-headed thinking. Here’s a quick snapshot:

Virtual Reality. The overriding online discussion themes focused on how to help the SBA handle the avalanche of new loan requests. New programs in the works may address that issue. Meanwhile SLPC recommends closely following program requirements for new applications as the surest way to expedite loan approval.

Help is on the way. New ALP Authority regulations. Everyone eagerly anticipates the issuance of regulations to implement the “Express Loan Authority for Accredited Lenders” authorized by Congress. And although the authority for such a program expires on September 30, 2023, it’s expected to be renewed. This would allow ALP-CDCs authority to approve, authorize, close, and service 504 loans of $500,000 or less subject only to SBA’s review and acceptance of eligibility. SBA would not review CDC decisions involving creditworthiness, loan closing, or compliance with legal requirements imposed by law or regulation.

Enthusiasm for the ALP Express Authority was tempered by some people expecting that the implementing regulations would be accompanied by restrictions on such loans to higher-risk industries. Some expected increased SBA scrutiny when ALP CDCs come up for renewal, or higher barriers to entry into the program. Needless to say there was speculation on these and other issues. We’ll just have to wait and see until the regulations are implemented.

Meanwhile at JRB, we’re recommending that clients increase their scrutiny of applications so as to increase “first pass” approvals. The level of first pass approvals will be a critical factor at the time of renewal of ALP authority, or for admitting new CDCs to the program.

Spring has certainly sprung! Keep those positive thoughts rolling.

Richard Jeffrey
Senior Associate, CDC/504 Program