Small Business Administration (SBA) loan applications require extensive documentation, including financial statements, tax returns, business plans and other supporting documents. As an SBA lender, it is your responsibility to keep documentation in-check, follow proper procedures, evaluate the borrower’s creditworthiness correctly and adhere to the SBA regulations. If your next SBA loan review is quickly approaching, be on the lookout for some of these common problems to address before your review commences:

1. Incomplete or inaccurate forms: Forms (1919, 1920, 159) are not accurately completed or do not contain all the required attachments. Tax Form 1050 is not signed/dated on the day of the initial loan disbursement.
2. Credit memo missing information: The credit memo does not contain all necessary items, as required by the Standard Operating Procedure (SOP).
3. Errors in loan authorization: Loan authorization is not prepared correctly or missing required items, and/or does not agree to the credit memo.
4. Missing seller’s written consent: Missing seller’s written consent for the use of tax return transcript(s) for the purpose of complying with SBA Loan Program requirements. In addition, missing the seller's written permission for the SBA lender to share the tax return transcript(s) with the SBA and its agents for compliance with SBA Loan Program.
5. NRHP due diligence: Missing due diligence documentation to determine whether the loan involves a property or site listed on the National Register of Historic Places (NRHP), or has historic significance possibly eligible for listing on the NRHP.

Avoiding the Errors

While offering SBA loans to your customers/members is an attractive, value-added service, it’s important to be sure related loan documentation is prepared and processed correctly, and is compliant with SBA Loan Program requirements. Having an independent SBA loan review performed by a qualified, experienced loan specialist, like those at Doeren Mayhew, can help eliminate gaps in your SBA loan documentation and provide guidance on effective internal controls. Looking for an easy way to enhance your internal loan review process? Doeren Mayhew’s GOLoan Review software serves as a self-evaluation tool and identifies weaknesses in SOP compliance of your SBA loan files. Contact us today to schedule a demo or learn more about our independent SBA loan review services.