As always, there was a lot to digest at the 2024 NAGGL conference.
And as part of our SBA lender consulting services we spent some time reviewing our notes and revisiting the sessions, and the standout was “do what you should do” (in contrast to SBA’s guidance throughout the year to simply “do what you do”).
Why? Because the overwhelming consensus, from NAGGL staff, SBA’s Office of Credit Risk Management (OCRM), and the Office of Inspector General (OIG), was that “do what you do” is not enough. Returning to prudent lending was the constant theme, and it came across loud and clear in “do what you should do” statements throughout the week.
In short, it turns out that “do what you do” may very well not be enough for you to stay in SBA compliance.
For instance:
With “do what you do,” SBA’s Lender Policies and Procedures are silent on many issues. That means there’s no consistent guidance for Lender staff and no reference for OCRM during reviews.
Lenders’ explanations for their actions (or inactions) to SBA centers and OCRM aren’t consistent across their own programs. “Do what you do” doesn’t automatically ensure that Lenders are uniform in their policies, or that those policies are effectively documented and communicated.
Recommendations:
SOPs - MUST means it’s a requirement. Review your policies and procedures to ensure the MUSTs are addressed correctly and consistently.
SOPs - SHOULD means it’s a best practice. Review and determine whether these are addressed in your policies and procedures. If not, why not? Is it a prudent action that should be addressed? (Hint: almost certainly. If SBA says “should,” then, well, you should address it in your procedures.)
SOPs – similarly-sized non-SBA loans. This is the information that can be silent – meaning, there’s no written record in policy or procedure for your team to follow. Review and update – and make sure you notify other areas within your organization so that, again, the approach is consistent for all, even non-SBA loans.
And finally, make sure you train across your program to bring everyone up to speed on any and all changes in your procedures.
We’ve written before about this question of “do what you do,” and we recognized from the start that it creates a hefty gray area that can be hard for Lenders to navigate. The reframe of “do what you should do” still leaves a lot up to the individual Lender, but at least it emphasizes the need to be consistent and clear across all departments, not just within the SBA team, and to review and backfill any gaps in documentation. That way, you can be sure your SBA loan files will meet SBA’s standards and requirements.
And as always – we’re here to help. With many years of SBA lending experience and SBA Lender consulting, we can quickly spot the gaps and then advise on relevant best practice approaches to fill those gaps. Give us a call at 877-576-0819, or drop us a line through our Contact form here!
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