Working Together Towards the Future. What an apt title for this year’s NADCO Spring Summit, as we came together in D.C. May 15-18 for the first in-person conference in two years. It’s an apt title as well for an issues-packed conference focused on moving forward. It was great to see everyone, and to again experience the lively give -and-take discussions at this time of volatile change and transition. In addition to the formal presentations, informal conversations buzzed around two Hot Topics: ALP Express and 504 Debenture rates.

ALP is On the Way. In Fact, it’s Here. In brief, among its provisions, the Express Loan Authority for Accredited Lenders (ALP Express) gives 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.

One great advantage of Spring Summit meetings in D.C. is first-hand accessibility to SBA leadership. At the conference, questions about this new program abounded, with key SBA staff providing on-site, updated information in a general session and a breakout. FYI: For additional support, SBA has provided an Application and Renewal Requirements Guide for CDCs.

504 Loan Debenture Rates. Industry experts Rich Sigg, Managing Director, Bank of America Securities, Kavitha Vignarajah, Director, Credit Suisse Securities and Steve Van Order, Selling Agent, Eagle Compliance, LLC, provided their insights into what’s causing the current rapid rate increase and what to expect in this constantly changing environment going forward. If multiple contributing factors can be captured: “This Explains a Lot: Markets, until now, never traded during a time of high inflation with the Fed exiting quantitative easing and entering quantitative tightening.”

Portfolio Management. Sessions included detailed information regarding insurance requirements and what to look for when documents are received. At JRB, we’ve covered insurance requirements many times in our eBulletins over the years. Here’s one from our series on Servicing: “Do Details Matter?  Solving Three Cases of “What’s Missing?” Importantly, this is a frequent finding during OCRM reviews. We recommend that CDCs pay additional attention to insurance requirements and their review of what is received from their borrowers.

CSA Hot Topics & ETRAN Loan Authorization. Members of the CSA team and SBA updated the industry on the status of the modernization project. They also presented information regarding the New 504 Loan Authorization.

OCRM. The OCRM team provided updates on the reviews being scheduled as well as an updated list of common findings during reviews. General Findings include:

  • Failure to provide Board with reports on the 504 loan portfolio asset quality on
    at least a semi-annual basis (Emerging issue compared to FY20)
  • Failure to submit a Statement of Personal History (SBA Form 1081) for new staff
    or Board member
  • Failure to conduct an Independent Loan Review (ILR) of its 504 portfolio every
    two years (Emerging issue compared to FY20)
  • Failure to provide SBA access to, and copies of, any work papers, policies, and
    procedures relating to the services performed in audit engagement letter
  • Failure to obtain pre-approval from SBA of its professional service contract

If you have questions on how to avoid some of these findings or wish to discuss other issues affecting your SBA loan program, Contact JRB.

All in all, Spring Summit 22 was an enjoyable and enlightening conference. Thanks to everyone who stopped by our booth. See you at the next NADCO conference.

Sandy Mortan

Senior Associate

504 Servicing

sandy@jrbrunoassoc.com

855.JRB.4.SBA (855.572.4722)

www.jrbrunoassoc.com