In this environment, things are moving fast. So it should be no surprise that our communications noting changes to SBA regulations don’t last longer than the time between JRB eBulletins. So it is with the Personal Liquid Resource Test.
When I said I was having a sense of déjà vu just a few short weeks ago, I didn’t realize that −BOOM! − I’d get it all over again. And so fast. Yet here we are. Although the Personal Liquid Resource Test again became part of SBA regulations on March 11, 2020, it was repealed when the president signed the Stimulus Bill on March 27. We’re in unprecedented times, yet I wonder what the record was for the shortest-lived regulation before this.
So now we’re back to SOP 50 10 5 (K) which requires lenders to determine that some or all of a loan isn’t available from the liquidity of owners of 20% or more of the equity of the Applicant, their spouses and minor children. (Subpart B. Chapter 2, II. E. 2. pg. 103 for 7(a); Subpart C. Chapter 2, II. E. 2. pg. 286 for 504). Although you don’t have to follow the Personal Liquid Test outlined in SBA Notice 5000-20003, you might want to keep it around. As of this date, there’s no new Notice stating that 5000-20003 has been supplanted by the Stimulus legislation that is now law. Now that it has been entered into law, we may be able to put this issue to bed finally, perhaps for ten years or more.
And by the way, the Affiliation standards established by 5000-20003 have also been repealed and we’re back to the standards of 50 10 5 (K). We’re very familiar with those by now. Come to think of it, at a time when new programs are flooding in, there’s some sense of certainty to have old familiar regs back again.
At JRB, we’re staying on top of the evolving regulatory environment. As always, we’ll keep you apprised and are here to help.
Richard Jeffrey
Senior Associate CDC/504 Programs
richard@jrbrunoassoc.com