Hot Topic Tuesday – Supervision and Enforcement Procedures for Lenders, CDCs, and Intermediaries

November 2, 2021

Delaney Sexton
Contributing Editor

Hot Topic Tuesday – Supervision and Enforcement Procedures for Lenders, CDCs, and Intermediaries

“The Office of Capital Access has updated SOP 50 53 to incorporate developments in SBA’s supervision and enforcement program given new legislation, regulations, notices, delegations of authority, and evolving practices,” reads the SOP 50 53 (2) that went into effect January 1, 2021. “In addition, it updates Lender peer groups, the corrective action process, Informal Enforcement Actions, confidentiality of supervisory information, guidance on shortened and non-renewal of delegated authority, and Intermediary enforcement.”

OCRM oversees all of SBA’s participants and identifies any unacceptable risk profiles. The level of monitoring is determined based on the participant’s magnitude of risk, and the SBA will provide the participant with a written review/exam report. The report includes findings, corrective action required, and recommendations within 60 business days. The participant must respond within 45 business days with a corrective action plan, and the corrective actions must be implemented within 90 calendar days.

A participant’s SBA operations may experience increased supervision by OCRM if there are weaknesses or high-risk levels. The participant’s senior management may be required to attend a meeting with SBA officials to discuss concerns with loan program noncompliance and other risk or integrity issues. Other types of increased supervision are increased reporting, capital restoration plans, watch lists, and enforcement actions if necessary.

7(a) lenders are required to pay fees that cover costs for reviews, examinations, and other lender oversight activities. Fees are specific to a particular 7(a) lender, and the lender is charged a fee for the actual costs of the oversight activity. SBA will send an invoice that clarifies the charges, the date that the payment is due, and approved payment methods. Delinquent (overdue) oversight fees will be charged interest and other applicable charges. Failure to pay these fees will lead to other enforcement actions like suspension or revocation of 7(a) lender eligibility, limiting the lender’s delegated authority, and/or further collection proceedings.

SOP 50 53 (2)