New Borrower Certification Requirements
There’s either a Technical Update or revised SOP 50 10 7 coming soon, but who knows when “soon” will be. So, “Do what you do – until we say otherwise” is pretty much what SBA is telling us in the meantime.
What to do whilst you wait? Great question, because there is one key change in SOP 50 10 7 that, if missed, will cause problems.
Your Borrower has to certify their eligibility for an SBA loan. This is new and will likely come with a revised Form 1919 – though we haven’t received that yet.
So what to do about that? Until we receive an updated Form 1919, go ahead and create a “Borrower Eligibility Certification” containing the required certifications, have it executed prior to submission to SBA, and maintain a copy with your current Form 1919.
But be careful. If you’re aware of any reason they aren’t eligible for SBA financing (for instance, less than 51% of the business is owned by a US Citizen or Lawful Permanent Resident), SBA is clear: do not submit these loans for approval even if the Borrower provides the Eligibility Certification; they will not be approved.
As we often say, the devil is in the details – and this is a really big, devilish detail. Without this certification, those loans approved on or after August 1, 2023 will be ineligible for an SBA Guaranty.
This is why, in managing this “do what you do” approach, we recommend continuing to perform the eligibility screenings that were required in SOP 50 10 6 (such as CAIVRS, sam.gov, size standard, just to name a few). The benefits far outweigh the time it takes, because, first, your team is already doing those screenings, so there’s no change to established practice. And second, you’ll find out early on if there’s anything that would make the loan ineligible, and thus avoid wasting six to 10 underwriting hours on a loan that SBA will deny anyway.
Finally, remember that the word “prudent” remains in SOP 50 10 7, so your policies and procedures should reflect that.
Want some help? We can help you decide which policies, procedures, checklists, and forms you should keep, and which should be updated – and how. Give us a call at 877.576.0819, or click here to use our email contact form.