SBA Guidelines for Lenders: Screen-Outs and Compliance Code Holds

There are two primary ways Lenders run into trouble with loan originations. 

The first – Screen-Outs – applies only during General Processing (GP) submissions.

The second – Compliance Code Holds – occurs within the automated SBA compliance engine, applying to both GP and Preferred Lender Program (PLP) submissions.

Let’s start with common Screen-Out problems.

• Forms 1919 or 1920 are incomplete or missing signatures

• The Lender’s Credit Memo is missing required content

• Debt refinance is missing supporting documentation or eligibility justification

• Business acquisition is missing key components

• Collateral is incorrectly valued

• Or there’s other missing documentation per the SBA SOP

Fortunately, Screen-Outs are easily preventable with some care and attention.

• Ensure Form 1919 is current with the loan structure

• Double-check all entries on Form 1920 before signing

• Update your universal credit memo to include SBA-required sections

• Make sure you’re applying SBA’s collateral discounts

• If a future OCRM review wouldn’t pass – it won’t pass SBA now

• Checklists! Checklists! Checklists! Yes, we know we go on about checklists all the time, but they work and can save a lot of time, trouble, and money.

Now, on to Compliance Code Holds. These holds are independent of underwriting, and are triggered before a reviewer even sees the file.

Here are the five most common.

1. Code 801, NextGen Criminal Record

   This flags an Applicant’s possible criminal history. 

   Fix: provide background documentation, including court records; upload these to “Compliance Support Documents.”

2. Code 804, Next Gen Other Adverse

   There may be sanctions or an Office of Foreign Assets Control flag, possibly because of name similarities or some type of foreign involvement. 

   Fix: provide documentation proving that the Applicant is not sanctioned. 

3. Code 807 – Taxpayer Identification Number (TIN) Mismatch

   This is most likely a typo causing a mismatch with IRS or state records. 

   Fix: correct the E-Tran record, and upload proof if SBA continues to flag it.  You will need FTA/SBA assistance to do this.

4. Code 808 – Entity Name Mismatch

   The business name doesn’t match up, whether because of a typo, a missing LLC or Inc, or only the DBA was entered.

   Fix: update E-Tran to exactly match the business’s legal name, providing formation documents or an IRS letter as proof if necessary.

5. Code 820 – CAIVRS

   This indicates that the Applicant is flagged as owing federal debt (student loans, VA/FHA/Government loans, or tax debt). 

   Fix: provide proof of payoff or settlement, or other documentation explaining the discrepancy.

Most Screen-Outs and Compliance Code Holds are simple enough to remedy. But they’re annoying and cause delays, so we’ll say once again: checklists are your friend!

If you have Screen-Outs or CCH’s that you’re wrestling with, we can help – and we can also help review your checklists to ensure your team is exercising appropriate care to remain in full SBA compliance. And we offer SBA loan processor training to keep your team up to date with all SBA lending requirements. Just give us a call at 877-576-0819, or drop us a line here. We’re ready to help!