When asked in a TV interview Wednesday about whether the United States would mandate a European-style “health pass” system for nightclubs or bars, Walensky said, “That may very well be a path forward.” Tear down the wall of invisibility.Centers for Disease Control and Prevention ( CDC) Director Rochelle Walensky suggested that vaccine passport-style systems might be implemented in the United States amid the COVID-19 pandemic. Eliminate considerations and/or other discretionary language. An example is the phrase, “must consider.” It’s either a rule or it isn’t. LIQUIDITY: Eliminate ambiguous language from 504 program. Organize all information regarding specific subjects or a particular program in one, easily accessible location. Change information from “legalese” to common English for better understanding and application. SOP IMPROVEMENTS: Offer separate SOP’s for 7a lenders and the 504 program to eliminate duplication. LTV cannot exceed 90% (or 85% for special purpose properties). There should be no limit on cash out for debt refinancing under the 504 program, other than LTV. Also note that the primary benefits of the 504 loan (low down payment, long-term fixed interest rate) accrue to the borrower, not the lender. The 504 program is a jobs creation program whereby the CDCs are required to measure the actual jobs created after 24 months resulting from the loan, not just an estimate made at the time of application, which is never verified. The Credit Elsewhere requirement should not be a factor in the 504 loan program. This is in accordance with the SBA attracting strong guarantors to help repay loans, taking more of the risk away. If this review is not eliminated, then modify it to include a modernized personal resource test accounting by today’s larger capital standards. If a business meets SBA standards, this is onerous and could keep money out of the hands of a qualified applicant because of an investor helping them start a small business. The review of cash carried by 20% owners. It is totally unrealistic to ask a seller to wait that long for repayment. The Seller’s Note in the 504 program needs to be 3 to 5 years, not 20 or 25 years. The bottom line is that CDC’s want to provide better customer service to both the TPL and the borrower.
If a CDC is well-managed and OCRM compliant, then the designations should offer specific benefits. Why are there ALP and PCLP designations if they both offer the same level of scrutiny when processing a loan application? It seems to make the process less economically feasible. PCLP processing would be used more frequently by CDC’s if it wasn’t so cost prohibitive. For improved delivery of the 504 program, why not allow SLPC to streamline the loan application process for ALP CDC’s to simply check for eligibility? Allow the underwriting responsibility of the loan with the ALP CDC. It takes three separate approvals from the TPL, CDC and SBA just to approve a loan. There are too many approvals required in the 504 loan program. Alternatively, permit successful lenders/CDC’s to work their respective programs without as much regulatory oversight as unproven lenders/CDC’s. Provide delegated authority to CDC’s to eliminate “micro-managing” and bogging down with excessive corporate governance compliance efforts. Attention to the program needs to be a priority. Improvements and fixes are needed in the 504 program, which appears to have been languishing for several years (circa 2010). This really hinders the CDC’s ability to tackle new projects for continued growth in the 504 loan program. Even certain 7a lenders are not controlled to this extent regarding hires and fingerprinting requirements. OCRM’s control who we can hire and require fingerprints for everyone involved with a CDC. It is becoming way too difficult to manage.
OCRM’s have control of everything from the number of required board members, the way annual reports must be written and other assorted internal policies. Governance and regulations for CDC’s has become too much to handle. Here are some of your responses from our poll several weeks ago: SBA Hot Topic Tuesday - What Is the One Thing You Would Change in the SBA 504 Loan Program?