Shortlist of SBA Changes to Watch: New Working Capital Pilot Program, Compliance Deadlines, and Updated 1919
This summer a number of changes rolled out to the 7(a) program. A shortlist:
- NEW Green Lender Initiative
- NEW Working Capital SBA Line of Credit
- NEW Compliance Deadlines Under the Small Business Lending Rule
- NEW & Updated SBA Forms
NEW Green Lender Initiative
SBA has announced its plans to help more lenders participate in clean energy financing through the new Green Lenders Initiative. The specifics of this initiative are still to be determined, but the intent is clear: to help lenders “leverage SBA’s loan guarantees, secondary market, and other services to scale lending to Main Street small businesses working to decarbonize and lower energy costs for American homes and businesses”.
Consequently, the administration’s hope is that more small businesses will invest in their own clean energy initiatives, including the reduction of carbon emissions.
The Green Lender Initiative should be on the radar of all SBLC lenders, but especially for our Community Advantage lenders. More details and thoughts on this new initiative are forthcoming as more information becomes available from SBA.
Read the full press release here: https://www.sba.gov/article/2024/07/22/biden-harris-administration-opens-sba-loan-programs-new-green-lenders-help-small-businesses-meet
NEW Working Capital Line of Credit
The most notable introduction of the summer: the SBA is preparing lenders for the rollout of the new Working Capital Pilot SBA Line of Credit.
The three-year WC Pilot took effect on August 1, 2024, and, unless extended, or made permanent, is scheduled to end on July 31, 2027.
The WCP authorizes lenders to make both asset-based and transaction-based WCP 7(a) lines of credit (LOCs) in amounts up to $5 million, with the lines available to support both domestic and international transactions.
New Compliance Deadlines under the Small Business Lending Rule
On June 25, 2024 the Consumer Financial Protection Bureau (CFPB) issued an interim final rule extending the compliance dates and making other date-related adjustments to the small business lending rule (the “SBL Rule”).
The extended deadline reflects ongoing litigation regarding the SBL Rule, however lenders should remain aware of its requirements and deadlines as the SBL Rule creates new reporting and compliance requirements for many SBA Lenders.
New deadlines are effective August 2, 2024.
New and Updated SBA Forms
The following forms were updated this summer:
- SBA Form 1919 “Borrower Information Form”
- SBA Form 1086 (12-23), Secondary Participation Guaranty Agreement
- SBA Form 1502 (12-23), Guaranty Loan Status & Lender Remittance
Updated 1919 Borrower Information Form
The updated SBA Form 1919, “Borrower Information Form” that was revised to reflect the Criminal Justice Rule is now available as a fillable pdf.
Download the Fillable PDF Form Here: SBA Form 1919 04.2024.pdf
Read the Information Notice: https://www.sba.gov/document/information-notice-5000-857390-sba-form-1919-update-criminal-justice-reviews-final-rule
You may continue using the version of the form currently posted on SBA’s website, or you may use the updated version. SBA is providing a 30-day grace period to start using the updated form from the date of publication on SBA’s website.
SBA Form 1086 Secondary Participation Guaranty Agreement
The document provides sale data and related rights and responsibilities of all parties to the transaction and is used for each individual loan sale made by an SBA Lender.
The format and content of Form 1086 were updated in this version, including additional provisions for Lender Certifications, updates to reflect new mandatory procedures, and clarification for separate lender accrued interest obligations.
Access the form here: https://www.sba.gov/document/sba-form-form-1086-secondary-participation-guarantee-agreement
SBA Form 1502 Guaranty Loan Status & Lender Remittance
This form, submitted on a monthly basis, was updated with minor changes to reflect current SBA requirements.
This new version of Form 1502 must be used going forward from the August 31, 2024 filing, onward.
Access Form 1502 here: https://www.sba.gov/document/sba-form-1502-sba-form-1502-instructions
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