SBA Tech Issues Disrupting Main Street Fundings

June 9, 2016

SBA Tech Issues Disrupting Main Street Fundings

By Bob Coleman
Editor, Coleman Report

90% of the industry says SBA’s recent email and 504 processing issues and are directly impacting their ability to deliver capital to Main Street.

With Sacramento off the grid, and lack of certainty if emails are being delivered, lenders tell me they are resorting to 20th century fax technology and Fedex overnight options.

Our unscientific survey obviously attracted those most upset with SBA. Here are of your comments.

Frustrating. This is equivalent to a government shut down for the 504 loan program.

It’s a shame this is occurring about three and a half weeks prior to the permanent 504 refi program coming back online. This is the type of thing that will knock the wind out from behind the sails of the 504 program, just as it’s getting ready to set sail again. This has and will continue to hurt the core constituency of SBA: America’s small business owners. Sounds like the agency doesn’t have the same IT redundancies in place that banking regulators (and others) require of its private sector lending partners. VERY amateurish and untimely.

An outage like this, and the corresponding lack of communication from the Agency, is not acceptable. At a minimum, SBA needs to send a notice to CDCs to pass along to its banking partners outlining the reason for outage and an estimated timeframe for resolution.

Two loan closings had to be rescheduled due to the e-mail problems, and there were delays with other items related to servicing actions. There also a delay in the notification of the approval of our PLP application.

We’ve lost 8 business days waiting for resolution of these communications issues which is unfathomable. This situation has caused lenders to fall back on a Plan B course of action – funding their loans prior to any SBA approval. This has caused a loss of faith in the program from both lenders and borrowers.

The communication has been awful and took NADCO several days to even notify the CDC’s of the problem. We try to successfully promote the SBA 504 loan program and outages like this do not help.

Our main issue is that we are not getting any confirmation of status.

We sent in a 327 change through etrans for a change on the authorization, but can’t get that information completed due to the outage. We are trying to close a loan, but we can’t without the 327. Very much affected!!

We have three deals stuck down there, one for almost two weeks on which we’ve heard nothing, other than getting a check in.

Nothing is getting done. We are backlogged on several applications and for several servicing actions and eligibility questions. Customers and bankers patience is wearing thin.

This outage has not been an issue as we have received notification. Its that repeated outages that resulted in 5-10 delays that have been happening all year that have been my problem.

We have a few loans that were submitted, prior to SBA’s email/504 processing problems, and as such we do not know the status of approvals; or changes that may be needed to the applications for approvals. We have angry banks and borrowers because we cannot give them a status of were their applications stand.

If they can’t receive anything electronically, why can’t I get anyone to call me back. What are the employees doing all day out there?

I have several requests into the SLPC. Most are for “No Adverse Condition” concurrence. The cut off is today, the 8th for submission to the respective SBA District Office.

Why does this continue to be an on-going problem? Private industry would never put up with this level of problems – or they would go out of business. And SBA wonders why we are all reluctant to use SBA One?!

Looks like we might miss the July debenture because of the outage.

I have no idea where various requests stand at this point, especially those submitted prior to the subject issues. Has anybody seen or started to review them? When might we expect to hear any real communication from SLPC?

Nothing seems to be getting through for us.

I have a project at SLPC that has an expiring PSA, and irritated Buyer/Seller/Banker/Brokers, all of them directing their anger towards me. The project has been at SLPC for over 12 business days, which is more than DOUBLE the average turn time for our projects.

In addition, SBA has done little to communicate these issues to CDCs. That lack of communication is very frustrating.

If they can’t e-mail us, then why not use the old fax technology? Why do borrowers have to suffer?

Having a problem getting a citizenship verification. It has taken over a week.

June 9th is the CDC’s deadline to get 504 applications for the July 13th funding to the SBA District Counsels. Since we can’t get our “no adverse change” actions approved, we can’t submit the loans. This is affecting a lot of borrowers.

The lack of communication from SLPC has compounded an already difficult situation which remains unresolved as of today.

We have at least one loan that has been there for 3 1/2 weeks. Since that time the PSA has expired, and everyone is frustrated–the banker, the borrower, and the broker.

We have a 504 loan that was approved by SLPC but we have not been able to receive the authorization to pass on to the Lender, which is typically the “proof” the lender is looking for in order to confidently fund the interim loan to purchase a property. The purchase agreement is set to expire soon and this situation is creating a major issue.

I am not able to meet my customer’s purchase deadlines with 504 loans and am having to push some requests to 7a to insure the customer does not lose their purchase. Since the customer sees the Bank as the real problem, it reflects on the Bank and the SBA.

Sent in a loan application Friday morning and still haven’t heard if they’ve ever received it. Trying to meet a closing escrow deadline and I don’t even know if my borrower can make it! Extremely frustrating. I’m just glad that I don’t have any servicing actions I’m waiting on for closing deadlines too!

The outage came at horrible time as deadlines for debenture submissions is this week. Loans that were targeted for the July debenture funding are now being pushed to August.

SLPC must upgrade their IT infrastructure. Clear as day.

We have clients that are going to lose properties as a result of this. How do we sell lenders and small business owners on the 504 product if we can’t deliver. I understand tech issues come up but this one has gone on for a unacceptable period of time.

Not a good thing for CDC’s reputation for representing the SBA.

Yesterday’s Update from NADCO —

▪ SLPC continues to operate and applications are being processed, although at reduced capacity. CDCs should expect delayed response times.
▪ Applications and Servicing 327 Requests should still be submitted using e504, but CDCs will not receive the typical automated response. Please do not submit applications already submitted.
▪ Signed authorizations will be sent from personal email boxes and not the typical SBA email box.
▪ Screenout notices will be sent from personal email boxes and not the typical SBA email box. Screenout responses should be submitted through e504.
▪ Closing requests and No Adverse Change 327 requests should be submitted to Sacramento504Center@sba.gov. This applies to new requests and requests that have been previously submitted and are still pending.
▪ CDCs with time sensitive requests should send an email to Sacramento504Center@sba.gov.
▪ Capacity is slowly increasing as SLPC finds temporary work around solutions and system components come back online.