Who approves an SBA 504 loan, the CDC or SBA?
Short answer
SBA makes the final decision unless the CDC has delegated authority. On an Accredited Lenders Program Express loan of $500,000 or less, the CDC decides credit. A Premier Certified Lenders Program CDC makes approval decisions, except certain eligibility issues (SOP 50 10 8.1, Sec. C, Ch. 1, Para. F.1).
In this answer, CDC means Certified Development Company.
SBA decides unless the Certified Development Company (CDC) holds delegated authority. All 504 loans are processed at SBA's Sacramento Loan Processing Center (SOP 50 10 8.1, Sec. C, Ch. 1, Para. F.1, p. 257).
The processing methods
- Non-delegated. The CDC submits the application. SBA makes the final determination on eligibility, use of proceeds, credit, collateral, structure and your contribution.
- Abridged Submission Method. A streamlined process with no delegated authority. Change of ownership projects and transactions between close family members cannot use it (Para. F.3).
- ALP Express. CDCs in good standing in the Accredited Lenders Program can underwrite, approve, close and service loans of up to $500,000. SBA reviews eligibility but not the credit decision (13 CFR § 120.842).
- PCLP. CDCs in the Premier Certified Lenders Program have approval authority, except certain eligibility issues (13 CFR § 120.845).
After a decline
A CDC can request reconsideration of a declined non-delegated loan within 6 months of the decline. A request after 120 days must include current financial statements (Para. F.4). After two declines at the center, a third request can go to the Director of the Office of Financial Assistance or a designee. That decision is final.
Previously declined applications
A CDC cannot use ALP Express authority for an application that SBA declined or the CDC withdrew (13 CFR § 120.842(c)).
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