SBA released a lot of new forms at the end of 2023. One of them was the much-anticipated streamlined Form 1919, bringing it into compliance with the new SOP 50 10 7.1.
We’ve reviewed it and attended SBA’s training on it, and came away with a few things that even us seasoned SBA experts weren’t aware of, or found interesting and important to share.
There’s a new field for the NAICS code. The Applicant is required to provide this, and it should match what they put on their tax filings.
However, if, during underwriting, the Lender finds the NAICS code isn’t right for the Applicant’s industry, SBA states the Lender must use the appropriate code, and the discrepancy must be discussed in the Credit Memo.
The Lender should also use the appropriate code when entering the loan into E-Tran, although it may get flagged because of the mismatch to the IRS return. That’s why it needs to be in the Credit Memo, in order to clear the flag quickly.
Form 1919 needs to be filled out by each Borrower and all Co-Borrowers. So, in EPC/OC situations, there should be one 1919 for the EPC, and one for the OC. If an individual is a Co-Borrower, such as in a partial partner buyout situation, there should be one 1919 for the OC and another for the Co-Borrower.
Forms must be signed within 120 days of the date SBA issues the loan number.
The EPC must use the same NAICS code as the OC.
And an important note on calculating the Use of Proceeds. When there are Co-Borrowers and/or EPC/OC, each Form 1919 should reflect the use of proceeds only for that entity, with the aggregate total of all the Form 1919s equal to the total loan amount.
For example, with $450,000 as the total loan amount requested:
EPC/OC, where $300,000 is for real estate purchase, and $150,000 is for working capital. The EPC’s Form 1919 Use of Proceeds should reflect only the $300,000 real estate purchase. The OC’s Form 1919 Use of Proceeds should reflect only the $150,000 working capital. Combined, the two then total the $450,000 loan amount requested.
One final change to note: the Form 1919 is required to be obtained and maintained in the file for all non-delegated and delegated SBA 7(a) loans, but it’s no longer required to be uploaded to SBA via E-Tran for non-delegated loans.
As always, we’re here to help. If you have questions about the new Form 1919, or need help training your people on the new 1919 (or any other SBA topic) – let us know! Call us at 877.576.0819, or email us through our Contact form. There’s always a learning curve when SBA releases new forms and procedures!