March 8, 2010
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-Lender Update-
SBA Procedural Notice
CONTROL NO.: 5000-1143
SUBJECT: Additional Funding Available and Extension of Authority for 7
(a) and 504 Recovery Act Loans
EFFECTIVE: 3/5/2010
On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (P.
L. 111-144). This legislation provides an additional $60 million to support new
7(a) and 504 loans under Sections 501 and 502 of the American Recovery and
Reinvestment Act of 2009 (the "Recovery Act"). These funds are available to
provide fee relief for certain 7(a) and 504 loans and a higher SBA guaranty for
eligible 7(a) loans. In addition, this legislation extends the authority for SBA
to provide a higher guaranty on eligible 7(a) loans to March 28, 2010. This
authority applies to applications received by SBA on or after March 2, 2010.
Funding of Loans in Queues As described in SBA Procedural Notice 5000-1142, as a
result of increased lending activity and in anticipation of the end of the
availability of Recovery Act funds, SBA re-activated the SBA Recovery Loan
Queues for 7(a) and 504 Recovery Act loans effective February 22, 2010.
On Wednesday, March 10, 2010, SBA will begin funding applications and requests
for increases to previously approved Recovery Act loans that are in the 504
Recovery Loan Queue.
Also on Wednesday, March 10, 2010, SBA will begin funding applications and
requests for increases to previously approved Recovery Act loans in the 7(a)
Recovery Loan Queue as follows:
• Applications for new loans that entered the Recovery Loan Queue on or after
March 2, 2010 will be eligible to receive both fee relief and the higher
guaranty. Requests for increases to previously approved Recovery Act loans with
the higher guaranty that entered the Recovery Loan Queue on or after March 2,
2010 also will be eligible to receive both fee relief and the higher guaranty.
• For applications for new loans that entered the Recovery Loan Queue prior to
March 2, 2010, and that need the higher guaranty, the lender has until March 9,
2010 to withdraw the application and re-submit it as a new Recovery Act loan. If
the lender does not withdraw the application from the queue and re-submit it,
the application will be eligible to receive fee relief only when it is funded on
March 10, 2010.
• For requests for increases to previously approved Recovery Act loans with the
higher guaranty that entered the Recovery Loan Queue prior to March 2, 2010, the
lender has until March 9, 2010 to withdraw the request and re-submit. If the
lender does not withdraw the request and re-submit it, SBA will withdraw the
request from the queue as of March 10, 2010.
Once all of the applications and requests for increases in the Recovery Loan
Queues are funded, the Recovery Loan Queue homepage will remain on the website
and in the "green" phase as long as funding remains readily available.
Information on the Recovery Loan Queues may be found on SBA's website at
http://www.sba.gov/recoveryq/index.html.
SBA is changing the language under "Special Purpose Categorization" as follows:
Previous language: "This is not a Recovery Act Loan?" Previously, the loan
application submission from the lender would default to a Recovery Act loan
unless the box next to this question was checked by the lender.
New language: "This is a Recovery Act Loan." Effective March 10, the new
language will be reflected in E-Tran and the box next to this statement will
already be checked. For non-Recovery Act loan submissions, the lender will need
to un-check this box.
Fee Refunds and Loan Cancellations
SBA will refund to lenders and Certified Development Companies (CDCs) eligible
fees on those non-Recovery Act loans approved on or after March 2, 2010 that
would have been eligible for fee relief. If borrowers have already paid lenders
or CDCs for the fee on eligible loans, lenders and CDCs must reimburse the
borrowers from the SBA refund and retain documentation in their loan files to
prove they have done so. These loans will then be identified as Recovery Act
loans.
There will be no fee refunds or higher guarantees for loans approved as
non-Recovery Act loans prior to March 2, 2010.
In addition, SBA will not allow loans that were approved as non-Recovery Act
loans prior to March 2, 2010 to be cancelled and then resubmitted as new
Recovery Act loans unless the resubmitted loan is not a replacement for the
original loan, as determined by SBA on a case-by-case basis. Cancellation and
resubmission of the same loan would use the limited appropriations made
available under the Recovery Act to provide fee relief and/or an increased
guaranty on loans already approved without the need for the provisions of the
Recovery Act and would be contrary to the intent of the new funding, which is to
stimulate new lending.
Requests for such consideration must be submitted by the 7(a) lender to the
Standard 7(a) Loan Guaranty Processing Center in Citrus Heights, California, and
by the CDC to the Sacramento 504 Loan Processing Center. The request will be
reviewed and a recommendation will be forwarded to the Director/Office of
Financial Assistance for approval. Provisions for this consideration and the
general cancellation policy were set out in SBA Policy Notice 5000-1103,
effective April 10, 2009 (which can be found at
http://www.sba.gov/aboutsba/sbaprograms/elending/notices/BANK_FY_09_NOTICES.html).
Continuing Requirement
As a reminder, all Recovery Act requirements continue to apply to new Recovery
Act loans. This includes the requirement to document the loan file to show
compliance with the particular eligibility requirements for Recovery Act loans.
SBA Information Notice 5000-1134, issued December 9, 2009, reminds 7(a) lenders
and CDCs of the specific documentation requirements for certifications
concerning the borrower's hiring practices and that no Recovery Act loan funds
go towards financing restricted uses (swimming pools, golf courses, zoos,
aquariums and casinos or other gambling establishments). Lenders and CDCs are
also reminded of the requirements governing the reporting of jobs created and
retained.
SBA's web site will be modified consistent with this Notice.