WASHINGTON—The Small Business Administration (SBA) has published an interim final rule – along with a request for additional comments – to incorporate express loan program requirements into other business loan program regulations.
Commenting in December 2018, NAFCU, which meet with SBA officials on Feb. 11, said the proposed rule would streamline processes and reduce credit unions' regulatory burden. However, the association asked the SBA to:
- Reevaluate the threshold for personal resource injection for loans less than $350,000 "to ensure that these borrowers are not unduly burdened by injecting a significant proportion of their liquid assets into the applicant business"
- Reinstate fee waivers to ensure credit unions with limited resources are not forced to stop offering SBA products due to the limited cap on lender fees compared to the allowance of reasonable fees
Concerns Expressed
NAFCU noted the SBA addressed both concerns in the interim final rule:
- Personal resources test: The interim final rule adopts a modified personal resources test – when the total financing package is $350,000 or less, each 20% owner must inject liquid assets that are in excess of two times the total financing package, or $500,000, whichever is greater
- Lender fees: The interim final rule adopts a modest change to the amount allowed for loans under $350,000. The maximum fee allowed is $3,000 as compared to the proposal of $2,500
The interim rule goes into effect March 11, though two sections have a compliance date of Oct. 1. It is open for a 60-day comment period.