If You Have Transactions Pending SBA 7(a) Underwriting READ THIS NOW!
ENLIGN DEAL TEAM | 07/23/2015
As of Thursday, July 23 the SBA will no longer automatically be issuing SBA 7(a) loan numbers.
Congress will need to pass legislation to raise the SBA guarantee minimum above $18.75 billion for this fiscal year. If congress does not act October 1, 2015 will be the soonest loans not already approved will be approved for funding.
You may want to contact the loan processor for any loans you have in underwriting to see if they have been affected.
Some common SBA 7(a) misconceptions:
1. Commercial lenders ARE NOT REQUIRED to receive SBA underwriting approval to make a business acquisition loan. The 7(a) program provides free insurance to the bank (fees are paid by the borrower).
2. The SBA does NOT loan money via the 7(a) program. The SBA rather guarantees the commercial lenders money up to a defined percentage at the time of a borrower default.
3. Under “normal” circumstances it does not take “forever” to get an SBA guarantee commitment. The fact that $18.75 BILLION of guarantees have been approved this fiscal year so far proves that the program is rather efficient and very popular among business buyers.
Specific details from SBA's notice 5000-1344 dated July 22 are:
Applications will be processed up to the point of approval and then will be placed into a queue awaiting the availability of program authority (the "Queue").
Once program authority becomes available due to Congressional action or as a result of cancellations of loans previously approved this fiscal year, applications in the Queue will be funded in the order they were approved by SBA, with the exception that requests for increases to previously approved loans will be funded before applications for new loans.
See this link for the complete official notice: http://colemanreport.com/wp-content/uploads/2015/07/5000_1344_program_level.pdf
For more information, visit https://enligncurrent.wpengine.com
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