If your household is like mine, we go through the ritual of tossing out dated stuff in the pantry. I went through my cupboards the other day, tossing all the cans that were beyond their “Best By” date. I know that “Best By” doesn’t mean “Turns to Arsenic,” and that canned goods can last a long time. But the nuns in my grade school were very strict so I figure that if I disobey a directive stamped on a can, I’ll have to stay after class, and write the Ten Commandments backward twenty times or something. Hey, here’s a dandy item: tomato aspic. I needed this? “Best By” date: June 1, 2022. Into the trash.
Of course this ritual reminded me of something SBA: the time-sensitive documentation dates for SBA exhibits. You know the ones: Personal Statements are stale after 90 days. Business Financials are stale after 120 days, and on and on. We all know that if a statement is stale-dated, we get another one. But Loan Officer Taylor ran into something a bit different last week and called me. The situation:
Taylor’s CDC was trying to close a loan authorized in 2019. When it was approved, the CDC didn’t submit tax transcripts to SBA. Now they’ve discovered that the tax years they need to verify are too old for the service used to obtain the transcripts they need, and the only option is for the borrower to request them from the IRS. Of course, that takes some time. The CDC would miss some funding dates and interest rates are likely to go up. Oh my! Whatever can Taylor tell the borrower? The milk is already spilled, so don’t cry over it. Clean up the mess and get on with it.
Best Practices. Going Beyond the Label. As part of my CDC training classes, I cover little-known facts about the SOP that can help: Many CDCs miss the deadline for getting the Loan Authorization signed. Although Form 4506-C has replaced Form 4506-T, the SBA requirement to submit that “Request for Transcript of Tax Return” form or, alternatively, Form 8821 “Tax Information Authorization,” within 10 days of receipt of the Authorization is still valid. (Given the time it takes to get the tax transcripts back from the IRS, it’s best to submit the request during the application process.)
Here’s another one: A CDC no longer has to send the signed Loan Authorization to SBA within 10 days of issue, although the Authorization itself only requires that it be executed by all parties within 10 days of loan approval. So don’t wait to get it signed until the deadline for doing the “Request to Ship” that you need right before closing. Get it signed within 10 days of approval so when it’s time to submit it, just dust it off.
Since we’re talking about deadlines, there’s no need to wait until the Loan Authorization is signed to collect 2/3 of the CDC’s Processing Fee. When SBA issues the Authorization for Debenture, the Loan Authorization is considered signed, and the CDC may collect. Best Practice: Collect a deposit during the application process, and when the loan is authorized, apply the deposit to your earned processing fee.
Working ahead pays off. Back to the pantry to line up my cans by their “Best By” dates.
Richard Jeffrey
Senior Associate, CDC/504 Program
Head Underwriter
855.JRB.4.SBA
richard@jrbrunoassoc.com
www.jrbrunoassoc.com