A: SBA's SOP guidance regarding using escrow accounts for disbursing 7(a) proceeds is limited. [See SOP 50 10 5(A), page 212, paragraph III.A.2).]  However, whether an escrow is used or whether the funds are disbursed directly to the borrower, you must follow the same procedures for documenting that the disbursements are being made in accordance with the terms of the loan authorization. This could include the use of joint payee checks (which SBA continues to talk about even though the practice is less common in commercial lending today), or it could be via checks made payable to vendors or other appropriate payees. The key is that you must obtain, and maintain in your loan file, documentation showing that the loan proceeds were appropriately disbursed.
 
The Unilateral Servicing Matrix gives a lender the authority to change the approved uses of proceeds prior to initial disbursement, I believe that this would be covered under "other changes to loan disbursement" which is shown as part of a lender's unilateral authority without even the requirement that you provide notice to SBA. (7th item under "Prior to Initial Disbursement" on the 1st page of the document.) If the loan has been partially disbursed, the guidance is even more clear (6th item on 2nd page included in box headed "No Approval or Notification.") Once again the key is appropriate documentation. When changing uses of proceeds, you must fully document your file to indicate why the change was necessary (in your case, because the loan balances being paid off had been reduced), and to show the specifics of your revised uses of proceeds. Then you must disburse the loan in accordance with your new uses of proceeds.  [As an aside, if your change were more dramatic - e.g., deleting the use of proceeds for the purchase of a major piece of equipment and, instead disbursing the funds for working capital -- despite the authority provided via the matrix, I would proceed with caution, and would try to get SBA input since this would be a complete change in the loan purpose and would also affect your collateral coverage.]