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  • Writer's pictureRebecca Mendoza

The KISS Rule of SBA Disbursements

SBA Lender Consulting Services

As part of our SBA lender consulting services, we’re often contracted to complete loan reviews. Whether it’s a post-closing review, an annual portfolio review, or what we refer to as a “forensic” review (when a loan is headed toward liquidation), one of the areas with the most challenges has to do with how disbursements were documented.


All the heavy lifting in processing the loan request, underwriting the loan, and submitting for SBA guaranty approval is complete. Phew! All that’s left is to disburse the funds to the borrower, right?


Not quite. And it can get stressful.


How lenders disburse a loan is critical to ensuring the guarantee remains intact. Insufficiently documented disbursements can often be difficult to back-fill and will likely cause a repair to the guarantee at repurchase – if not even bigger problems.


And you probably know that, as SBA consultants, we firmly believe in the KISS rule: Keep It Simple to Succeed!


So, let’s look at nine tips on disbursements, from our years of experience as an SBA lender service provider.


  1. Process, process, process. Which, of course, also means checklists, checklists, checklists. Use the same process, and the same checklist, for every disbursement on every SBA loan. After all, why keep re-inventing the wheel?

  2. Use the same file-name convention for every file. Simple enough, right? When you use the same naming convention, you always know where to find everything.

  3. Save every disbursement separately with the documents, in the same order for every disbursement. Again: you always know where to find whatever you might need.

  4. If there are multiple records per disbursement, use bookmarks in your PDFs. Not sure how to combine PDF documents into a single PDF? Or, not sure how to add bookmarks to a PDF? There are a gazillion how-to articles and videos; just Google “combine PDFs into one” or “add bookmarks to PDF,” and you’ll find instructions.

  5. And for multiple items per disbursement, use a spreadsheet to track individual line items to the total disbursement. (We would never recommend a shoebox for receipts – but – think of this as the electronic version of that shoebox.)

  6. Create – and use! – a master disbursement spreadsheet to document disbursements according to Use of Proceeds categories. Having one place to quickly look up all the relevant information is a huge time-saver.

  7. Managing reimbursements to the Borrower? You’ll need invoices and canceled checks, or other evidence of payment from the Borrower, to support their request for reimbursement. And you’ll need evidence the funds were disbursed from the loan and reimbursed to the Borrower.

  8. Remove all duplications and correspondence not directly related to supporting evidence of the disbursement. This helps avoid future confusion. Future “you” will be grateful!

  9. Document all changes to use of proceeds categories along with an analysis of the effect to the overall project. Again – future “you” will be glad you’ve done this. It’s all too easy to believe, in the heat of the moment, that you’ll remember. But you probably won’t, so why risk it?


When you follow these guidelines, SBA’s Office of Credit Risk Management (OCRM) will undoubtedly award you a ⭐, and your Liquidation Team will – well, they may not actually kiss you, but they’re sure to thank you for Keeping It Simple for Success!


And remember, our SBA lender consulting services include a suite of lender processing services, including SBA lender training classes that will help keep your SBA department aligned with all the SBA guidelines for lenders.


Curious? Give us a call at 877-576-0819, or drop us a note through our Contact form. We’d love to talk with you about how your SBA department can learn to KISS better!

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