11.10.10: SBA Form 1086 Warranty Period Removal to End the Delay in Sale Treatment

As part of a new rule change, the SBA is removing the 90-day warranty period from Form 1086, the participation form required on SBA 7(a) loan sales. While the warranty is in effect, the seller is prevented from taking sale treatment, in accordance with FAS 166, for 90 days. The changed form is now under review in accordance with federal rules and an update to Form 1086 is expected in the next 60-90 days. It seems unlikely that the changes will be implemented in time for sellers to enjoy sale treatment before calendar year end.