Non-delegated Lender? Slow down to speed up your 7(a) loans!
Ever driven past someone stopped for speeding?
We all have.
(Note: we’re not asking if you’ve ever been stopped for speeding!)
We speed through things, whether on the road or in our offices, because we want to get somewhere faster. But sometimes that actually results in getting there slower, or even not at all.
The Navy SEALs have a saying: slow is smooth, and smooth is fast.
Non-delegated Lenders are Lenders who haven’t been approved by SBA as 7(a) “experts” and therefore don't have authority to approve an application for guaranty of 7(a) loans without prior SBA review.
Which means that, as a non-delegated Lender, you need to submit a complete package to SBA for their approval. And if you’re in a hurry – because of course you want to get funding to your client as soon as possible – you may end up sitting by the side of the road whilst SBA writes a “speeding ticket” in the form of screen-outs.
Let’s review seven common screen-outs we see, so you can go slow in order to go fast.
What’s the date on your PFS or Form 1919? If it’s more than 90 days prior to the date you’re submitting the package to SBA for approval – it’s a screen-out.
Is the PFS filled out accurately, or is it missing information? Yes, that’s a screen-out.
Are the interim financials’ “as of” date not within 120 days of submission? Yep. It’s a screen-out!
Did the Seller sign tax returns and financial statements? If not … you guessed it: it’s a screen-out.
Did you submit full affiliate financials (such as tax returns, financial statements, and debt schedules), if relevant for this application? If not… yeah, you know the answer.
Are the closing dates on any Purchase Agreements prior to the date you’re submitting the package to SBA? Yes, that’s another screen-out.
How are you handling closing costs? You need to break out the details in the total project table – and not only when they’re part of financing, but also if they’ll be part of injection. Yes, we understand that closing costs are often estimated, but if the actual costs come in below expectations, especially if they’re part of injection, you risk compromising actual costs as well as the overall percentage of required injection. Is this a screen-out? It could be, but it could also be an unpleasant surprise at funding.
We know you’ve got a lot on your plate, and we know the temptation to speed through the process so you can check off your to-do list.
But as the saying goes, haste makes waste. Slowing down means you don’t make mistakes, and therefore you won’t need to spend time re-doing work when SBA denies your application for guaranty.
Want some help with this? As always, we’re here to lend a hand and provide our expertise. With many years’ experience, we can get you through the process in record time – without speeding! Give us a call at 877.576.0819, or contact us through our website at www.lrmlenderconsultants.com.