The Office of Financial Assistance announced an update to the Standard Operating Procedure (SOP) 50 10 5. This update, known as SOP 50 10 5(D), will be effective on October 1, 2011. This version of the SOP will apply to all applications received by SBA on or after October 1, 2011.
Change Highlights:
- Maximum 7(a) loan amount increased to $5 million and maximum amount of a 504 debenture increased to $5 million.
- ETran Use: Requires that lenders use ETran when submitting loans to SBA under any delegated authority. This includes PLP (including PLP-EWCP), Small Loan Advantage, SBA Express, Patriot Express, Export Express and Dealer Floor Plan loans.
- 7(a), CLP, S/RLA, SLA (non-delegated) and CAPLines (non-delegated) authorization modification requests: Through final disbursement, all requests are to be sent to the Standard 7(a) Loan Guaranty Processing Center.
- 504 Refinancing: Revised language regarding 504 debt refinancing to correspond with changes in the regulations.
- Delinquent Debt: Included the fact that under the Debt Collection Improvement Act, any business currently delinquent on federal government debt (excluding federal taxes) or has an owner, guarantor, or affiliate that is currently delinquent on federal government debt is ineligible for an SBA guaranteed loan. This had previously been inadvertently omitted from the SOP.
- Life Insurance: Clarified when life insurance must be required and added language that allows a lender to escrow life insurance payments.
- Additional guidance was added for the Franchise Registry.
- Clarified what fees may/may not be charged to a small business applicant, depending on the program.
- Updates were made to the section on Environmental Issues.
“The SOP is the bible for lenders and the key to any guaranty collection,” said Jim Brett, chief underwriter at ValueXpress. “It must be followed religiously.”