Live from MALC – Top 7(a) and 504 Screen Outs

September 9, 2021

By Joseph Coleman
Contributing Editor, Coleman Report

ARLINGTON – SBA lenders met at the Mid-America Lenders Conference this week prompting discussions about record 7(a) and 504 lending growth for FY21.

As a result, there was a rise in screen outs and origination processing issues.

The number one reason for 7(a) screen outs (34%) was Financial Statements/Projections according to SBA Lender Relations Specialist Michelle Torres, Dallas/Fort Worth District Office, who presented the top 7(a) and 504 Screen Outs for the last 12 months.

7(a) Screen Outs

  1. Financial Statements/Projections
  • Affiliate financial statements missing or incomplete
  • Personal Financial Statement incomplete
  • Projections missing or assumptions not included
  • Pro-forma Balance Sheet missing or incomplete
  • Historical financial statements missing or incomplete
  • Seller financial statements missing or incomplete
  • Interim Income Statement and/or Balance Sheet missing
  • Debt schedule missing or incomplete or doesn’t match balance sheet debt
  1. Credit Memo Incomplete
  2. Forms 1919 and 1920
  3. Debt Refinance
  4. Credit Not Available Elsewhere
  5. Change of Ownership

*The Top 6 categories account for over 80% of the Total Screen Outs in last 12 months.

504 Screen Outs

  1. Authorization Errors
  2. Incomplete Documentation
  3. Data submitted to ETRAN not Accurate
  4. Eligibility Issues not Addressed
  5. Project Cost not Properly presented
  6. Exhibits not summarized where appropriate
  7. P&L Spreads not Accurate
  8. Financial Analysis not Accurate
  9. Pro-Forma BS not accurate
  10. BS and Debt Schedule do not Reconcile