By now you have heard that the SBA released a new SOP (Standard Operating Procedure) document in May. The purpose of this email is to highlight a few of the more important changes to make you aware of them. Of course, anytime you have questions regarding these or other SBA issues, feel free to contact us.
-SBA has clarified the policies regarding debt refinancing. Formerly, the SOP stated that SBA guaranteed loan proceeds may not be used to refinance debt used to finance a loan purpose that would have been ineligible at the time it was originally made. SBA is clarifying this provision by adding language to explain that a lender may refinance debt originally used to finance a loan purpose that would have been ineligible at the time it was made, if the condition that would have made the loan ineligible no longer exists. SBA is also streamlining the requirements that the lender must take in order to ensure that SBA guaranteed loan proceeds are only used to refinance debt that was used for eligible purposes.
As refinance opportunities present themselves contact us to further discuss these requirements.
- SBA has updated the real property appraisal requirements to conform to changes recently made in the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP now has only two written report options for real and personal property appraisal assignments: Appraisal Report and Restricted Appraisal Report. All 7(a) lenders will be required to obtain a current USPAP-compliant Appraisal Report, not a Restricted Appraisal Report, for all real property appraisals on loans over $250,000 secured by commercial realestate.
Be sure that your appraisers are aware of USPAP requirements and are preparing USPAP compliant Appraisal Reports.
– SBA has updated the requirements for business appraisals. They have added to the list of qualified sources to perform a business appraisal and have changed the business appraisal requirements for change of ownership transactions involving a Special Purpose Property. If an applicant business operates from a Special Purpose Property (for example, car washes, hotels, gas stations with or without a convenience store, golf courses, medical facilities or bowling alleys), the going concern appraisal must be completed by a Certified General Real Property Appraiser with experience appraising the specific business/property type.
Again, as these situations arise, we will help guide you through the specific requirements.