National Small Business Week

 
May 16-20
2011 National Small Business Week  ~ Washington DC

NAGGL is proud to once again be a sponsor of SBA's National Small Business Week celebration.

"Our partners in lending and investing are pivotal in helping small businesses create jobs and fuel our economic recovery," said SBA Administrator Karen G. Mills. "We honor their commitment as we celebrate our partnership in helping small businesses start up, grow and succeed."

We don't have all the results just yet, so if you're a winner and not noted -- PLEASE let us know if you, or a small business borrower you served, was honored -- we want to share in the celebration!.

CONGRATULATIONS to:

Large 7(a) Loan Lender of the Year -- Wells Fargo, Minneapolis, MN. In FY 2010, Wells issued more than $871.3 million in SBA guaranteed loans, with $305.6 million of those going to small business borrowers in underserved areas. Tom Burke serves on our board of directors. Congratulations to Tom and the entire Wells Fargo team! www.wellsfargo.com/press/2011/20110520_SBA

Small 7(a) Loan Lender of the Year -- Peoples Bank of Mendenhall, MS. In FY 2010, Peoples Bank made 320 SBA loans to small businesses, delivering more than $21 million to capital-hungry small businesses in Mississippi, with more than $6.8 million of that total going to borrowers in underserved markets. NAGGL is proud of Dennis Ammann and his hard-working group! More >

CDC of the Year -- Congratulations to Ohio Statewide Development Corporation of Columbus, OH, which made $8.5 million in SBA guaranteed loans, of which $550,000 went to underserved markets. We know Dianne Allen is proud of her team.

Export Lender of the Year Award --For the second year in a row, SBA and NAGGL recognize SunTrust Bank as the Export Lender of the Year. SunTrust made 33 SBA export program loans for $24.6 million in fiscal 2010 and 17 other types of SBA loans to exporters for $2.7 million. NAGGL extends a bravo to everyone at SunTrust Bank -- and thanks them for always being willing to answer NAGGL members' questions about the SBA Export programs.

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SBA Washington Metro Area District Office

2011 Financial Services Champion

Edward Tuvin, VP, Capital Bank       

Eddie Tuvin earned this honor for his long-standing efforts to help small businesses gain access to financial capital. In addition to his work with Capital Bank, a community lender in Rockville, MD, Eddie works with other lenders and members of the community to broaden access to capital for small businesses throughout the region. He is also the Executive Director of The Main Street Initiative. Eddie was featured with President Obama in 2010 when their now infamous handshake appeared on the Jay Leno Show and later at The White House Correspondent's Dinner of 2010.

Close to 400 people enjoyed a very full two days of educational sessions that ran the gamut from an interactive Town Hall with Steven Smits (associate administrator, Office of Capital Access) and Jess Knox (associate administror, Field Operations) to a very dynamic speaker on the state of the world economy (Dr. Jeffrey Rosensweig), and a very special guest, SBA Chief of Staff, Ana Ma. Folks attended breakout sessions that illuminated critical issues in eligibility and liquidation policies; that provided ways to de-stress the guarantee purchase process and avoid common findings in onsite lender reviews; and that imparted a wealth of information on understanding the False Claims Act, spotting fraud in 7(a) lending, and becoming familiar with many aspects of lending to creditworthy franchises -- while getting a sneak peek at the new Franchise Registry. Attendees also learned about the recovering secondary market, about export lending programs offered by SBA and Ex-Im Bank, the 504 debt refinancing program, and USDA loans. Attendees also enjoyed 'buzz sessions', visiting 55 top-notch industry vendors exhibiting in our SBA Marketplace, and fun networking at the Georgia Aquarium (above). NAGGL again thanks all of our speakers, sponsors, volunteers, exhibitors -- and our small, but extraordinarily hard working team that keeps everything running smoothly! 

Members can access presentations here through May 26 using their naggl.org login.

We'll report more in upcoming newsletters (and if you'd like to write an article on one of the sessions you attended, contact us), but a few items of special note:

1. Splitting larger ($1.5 million or greater) into $500,000 increments to aid in the assembly of pools to sell to investors. The Small Business Jobs Act (September 2010) contained a provision directing SBA to partition large loan guarantees into smaller $500,000 increments for inclusion in separate pools, upon request of a loan pooler. (See Notice 5000-1185)  There were several questions posed to SBA about when this provision would be implemented. We learned that the effort is 'ongoing' and that the 'plumbing' within SBA and between SBA and Colson Services, is underway to make this a reality. The estimate is that it will be another 120-160 days.

2. Reserve Account Agreement for 'Higher Risk' Lenders. SBA published Procedural Notice 5000-1205, Secondary Market Sales by SBA Lenders, Reserve Agreement in order to announce a long-awaited adjustment in a process implemented during the height of the depression in May 2009 (5000-1106) and reiterated more than a year later in July 2010 (5000-1161). Effective beginning June 30, 2011, the SBA will require 'higher risk' lenders seeking to sell loans in the secondary market to enter into a Reserve Account Agreement ("Agreement") with SBA " prior to requesting SBA approval to sell loans into the Secondary Market. (See April 17 News Flash)

There was a an outcry about the very significant dollar impact that this new policy would have on small banks, and it became a very hot discussion topic during the Atlanta conference. Although we have no concrete information to share just yet, SBA did state that they are "considering" making the Reserve Account "optional" for smaller lenders, and/or allowing 'higher risk lenders' wishing to sell loans to choose the method by which their loans would be reviewed by SBA -- the Reserve Account or review of each individual loan, but employing the lending experts at the Processing Center rather than/in addition to OCRM staff. Stay tuned!

3. SBA Express Temporary Maximum Increase; Lines of Credit. There was a great deal of discussion about the need for a new or revised line of credit option within the 7(a) program that will fill the gap once the $1 million Express loan maximum reverts back to $350,000 on 9/27/2011. SBA staff confirmed that this is a common theme they've heard while visiting cities across the country on the SBJA Tour. We expect to hear more about a line of credit program in the future.

Question: If I approve a $500,000 SBA Express loan now, when the program subsequently reverts back to $350,000, can I then increase the approved Express loan up to $1,000,000." 

Answer: No. SBA can only exceed $350,000 under the Express program until September 27.  After that, the $350,000 cap once again will apply -- so NEITHER new loans over that amount, or increases over that amount (even if loan made when larger size would have been permitted) will be allowed." [Watch for more information on this topic as we progress through the summer.]

4. Eligibility Issues - Change of Ownership between existing partners; Stock purchases; What can be counted to meet 25% equity requirement?  Confusion remains about these topics ... as my inbox attests. Watch for an article in the next In Focus! 

Passive businesses: NAGGL and SBA reminded attendees that there was an easing in the treatment of passive businesses introduced in SOP 50 10 5(C). It was reiterated that mini-warehouses (storage facilities, etc.) are now eligible.

ELIGIBLE

• No change - EPCs
• No change - Hotels, motels, RV parks, marinas, campgrounds - 50% of revenues from stays of 30 days or less
• NEW - residential facilities licensed as nursing homes or ALFs
• NEW - businesses engaged in leasing equipment, household goods, etc.
• NEW - businesses such as barber shops, hair salons, nail salons, etc. without regard to whether they hire or contract people providing services  

• Landlord and developers, including -
  • Shopping centers
  • Lessors of land for cell towers or wind turbines
  • Apartments buildings
  • Mobile home parks, etc

5. 504 Debt Refinance Program. SBA fielded some questions about the parameters of this initiative, which they described as having been purposely opened to fill a 'thimble' and for which there were still open questions about the safeguards needed when financing 'short-term debt with long-term financing.' The comment period ended May 18. Get NAGGL's comment letter >

6. sba.gov - NEW website. Attendees were told that if they have difficulties finding items on the new sba.gov, they should contact their District Office for assistance.

NAGGL has created a page of Quick Links to the new sba.gov for commonly requested items like SOPs, Forms, Authorizations, Centers, offices, etc. 
Get It ... and Make it a Favorite > 

Did you know on the Lender Forms page of sba.gov, you can sort forms by number or by name?

7. Disaster Loans. With this Spring's spate of severe storms, straight-winds, landslides, mudslides, tornadoes and floods affecting numerous areas of the country, SBA asked that lenders remember that the agency has a very active Disaster Loan Program that can be of great assistance during times like this. NAGGL appreciates and supports this important reminder -- we had members who could not attend the conference since their offices in Alabama had been destroyed. Get more information for yourselves and your borrowers here. 

Did You Know? 

1. Did you know that when the Loan Guaranty Processing Center (LGPC) calls a PLP lender to request a loan file to review, they are probably reacting to a preliminary report from the Office of the Inspector General questioning whether that particular loan may not have been correctly underwritten?
   
   It's true! Generally a processing expert on the staff at SBA's LGPC reviews a lender's processing actions to determine whether they complied with SBA loan program requirements and were consistent with prudent lending practices in response to findings by OIG. In order to conduct this review --  which can help you by resolving any issue(s) being preliminarily raised before they are included in the OIG's final report -- the LGPC needs to review your processing documents. So, if you get a call from someone in the Center asking for a loan file, you'll be helping yourself by providing copies of the requested documents as quickly as possible!
    
2. Did you know that SBA is working on version 9 of the Servicing and Liquidation Actions 7(a) Lender Matrix?
   
   The current version is ver. 8, dated 8/16/2010. We'll let you know when the new version of the Matrix is available.
    
3. Did you know that the current SBA Express 10 Tab Purchase Demand Kit contains a policy error and will need to be updated based on the new SOP 50 51 3, effective 11/15/2010?

The current tabs do not reflect current policy regarding purchase timing for loans approved on or after 5/14/2007. Liquidation activities do not have to be completed prior to requesting purchase. A lender is now allowed to request purchase after liquidating only the personal property collateral. [SOP 50 51 3, pages 154-155.] SBA has advised that the Express PDK and instructions are being revised to properly reflect this current policy. 

"In particular, the following collateral must be liquidated prior to requesting purchase:  

a. Loans Approved on or after May 14, 2007
For loans approved on or after May 14, 2007, unless the Borrower has filed for bankruptcy, the Lender must complete all prudent and commercially reasonable efforts to liquidate the business personal property collateral with an aggregate Recoverable Value of $2,500 or more (13 C.F.R. � 120.520(a)); and

b. Loans Approved Prior to May 14, 2007

For loans approved prior to May 14, 2007, the Lender must liquidate the collateral according to the requirements of the program under which the loan was made.
 ...
(4) Express and Pilot Loan Programs
All collateral; in addition, all other commercially reasonable means of recovery must be exhausted unless:
(a) The loan was made under the Export Express Program;
(b) The remaining principal balance of the loan is $50,000 or less; or
(c)  The loan involves prolonged litigation or other circumstances that will extend the liquidation process more than 90 days past the earliest date that the Lender could request purchase.