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SBA Hot Topic Tuesday — Common SBA Lender Errors

November 7, 2017

By Bob Coleman
Editor, SBA Hot Topic Tuesday

SBA Hot Topic — Common SBA Lender Errors

From SBA’s review of 354 lenders for FY 2017 — percentage of lenders failing to follow SBA’s SOP..

Eligibility

EPC/OC Conditions Not Met — 12%
Credit Elsewhere Test Not Documented — 10%
Prior Loss to the Government Not Documented — 10%
Size Determination Conditions Not Met — 10%
Debt Refinancing Conditions Not Met — 8%

Underwriting

Loan Authorization Deficiencies — 28%
Credit Analysis Deficiencies – Ratio Analysis — 20%
Appraisal/Business Valuations Not Obtained — 8%
Credit Analysis Deficiencies -Various — 8%
Credit Analysis Deficiencies – Collateral Analysis — 7%
Credit Analysis Deficiencies – Pro Forma Balance Sheet — 5%

Closing

IRS Tax Transcripts Not Obtained — 15%
Other Insurance Requirements Not Met –11%
Collateral Lien Deficiency — 12%
Equity Injection Verification Not Obtained — 10%
Hazard Insurance Not Obtained — 8%
Life Insurance/Assignment Not Obtained — 7%
NEHRP Requirements Not Met — 5%

Source: SBA

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