Over the years, our Lender SBA consulting has brought us a lot of questions from clients.
And those questions have ratcheted up since the recent issuance of new SOPs.
Why? Because they encourage you to just “Do What You Do” – but any experienced SBA Lender knows that’s just a bit unnerving. There are plenty of instances where you won’t have a clear “What We Do” because the topic was only applicable to SBA Lending, and therefore was never addressed in your regular commercial policies.
Case in point: SBA Size Standard Analysis.
In our SBA loan packaging services and our Lender SBA training, we’ve always advised our clients to have the size standard analysis in the credit memo directly, or as an addendum to the credit memo. We stress this even more now, since SBA removed the Form 1920.
Why do we recommend this?
You can insert a table with calculation formulas. Then your team just needs to enter the data to have the calculation done for them. No more math errors!
You can ensure your team is doing the size standard for the Borrower and all the required affiliates.
The Borrower will qualify on under their own NAICS code as well as globally with the affiliate.
Biggest benefit: your packagers will know where to find the size standard every time, the analysis will be done for them, and all they need to do is enter it into ETran.
And you can be confident in showing SBA your work; they’ll have the appropriate knowledge of the program when they can see it themselves.
Size standard is an SBA eligibility requirement, and failure to do the analysis properly can lead to a mistaken determination of eligibility – which means your guarantee is at risk.
So where can the size standard analysis go wrong?
The Lender is tasked with making sure the correct NAICS code is used. Accountants and Borrowers don’t always use the correct code on returns. Therefore, you run a risk of using incorrect codes.
The analysts might not use the Gross Sales from the tax returns, as required.
The analysts might include the interim financials in analysis, instead of only the tax returns.
The required Affiliates might not be properly analyzed.
We’ve offered lender SBA consulting services for years now, and we’ve seen SBA make many changes. Our recommendations are always for consistency, simplicity, and clarity, whether in our work as SBA consultants helping with the hands-on SBA packaging or offering SBA training to keep your team up to date on the most recent (and ever-evolving) requirements.
Give us a call at 877-576-0819, or drop us a note through our contact form and we’ll set a time to talk and see how we can help you figure out what “Do what you do” means when you don’t already have a process in place!
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