At JRB, lenders often ask us to interpret the many SBA Notices that come their way. Thankfully, the PPP flood of notices has long subsided, but SBA’s Notices are no less important because they can affect your loans in a major way. It’s no fun making sense of all this along with your daily challenges. Especially when some notices are revisions of revised versions of revised notices!

Case in point: SBA Procedural Notice 5000-844866.

A Bit of Background. As an experienced SBA lender, you likely know that for the longest time, SBA required you to use IRS Form 4506-T to verify business tax returns for 7(a) and 504 loans. Recently, SBA has required lenders to use IRS Form 4506-C instead. Now, for this latest Notice:

 Procedural Notice 5000-844866 key provisions. Effective March 1, 2023 thru March 1, 2024, SBA has extended the provisions in a previous Notice 5000-829416, allowing you to use IRS Forms 4506-C or IRS Form 8821 to verify business income tax forms. 

 And importantly, the Income Verification Express Service (IVES) will now only accept the October 2022 version of Form 4506-C. If you use a prior version, you’ll be rejected like a date from last year’s homecoming dance. Bottomline: If you’re using Form 4506 to verify taxes, make sure it’s 4506-C and not 4506-T.

If you use IRS Form 8821, you must ensure the type of transcript requested contains any changes to the original return if it was filed by the borrower. As the lender, you must also list yourself as the designee on Line 2 of the form. Most importantly, you must follow the instructions on Form 8821 to the letter or risk IRS rejection of the request and be sent back to Square 1.

You can always rely on JRB to help navigate the alphabet soup of SBA regulations!

Richard Jeffrey
Senior Associate