Special 7(a) Programs

April 13, 2006

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In an effort to expedite processing of larger loan applications under Section 7(a), the SBA has two special lender programs: the Certified Lender Program and the Preferred Lender Program. These programs are illustrative of the SBA's efforts to transfer more administrative and processing burdens to private lenders. Loan guarantee activity that is performed by certified and preferred lenders requires less staff time and paperwork by SBA. This enables the agency staff to handle a greater volume of loan applications and to devote needed resources to portfolio management and other agencies.

Certified Lenders Program (CLP). Certified lenders are lenders who have been more heavily involved in regular SBA guaranty loan processing and who meet certain criteria. Certified lenders receive a partial delegation of authority, and their loan guarantee applications are given a three-day turnaround by the local SBA office. This loan process accounts for about 30 percent of all business loan guarantees.

Preferred Lenders Program (PLP). Preferred lenders can decide unilaterally on SBA participation in eligible business loans. These lenders can determine eligibility, creditworthiness, loan structuring, loan monitoring, loan collection/servicing and loan liquidation actions, and to make necessary decisions at each stage of the procedure without, in most instances, SBA's prior review or consent. The purpose is to expedite processing time for creditworthy borrowers and to more minimize the administrative burdens on the SBA. The program is to be used only for the strongest credits: those on which the SBA can justify giving a lender the unilateral right to put government funds at risk.

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To locate the nearest local Certified or Preferred Lender, call your nearest SBA office or go to this link.

SBAExpress. To further accelerate the 7(a) program, the SBA has a program dubbed SBAExpress. This program is designed to increase the availability of smaller loans for SBA customers and to decrease the paperwork burden imposed on the Agency's lending partners. Under the program, selected lenders are authorized to make, service and liquidate loans in amounts up to $350,000 using their own application and disbursement documents and processes. Lenders are given the authority to attach an SBA guarantee to an approved loan without having to submit the loan application to an SBA field office for a credit analysis or review. These loans are sent to a single location for assignment of an SBA loan number and a determination of borrower eligibility. In exchange for the convenience of using their own forms and processes, lenders agree to limit the loan amount to $250,000, accept a maximum SBA guarantee of 50 percent, and waive payment on defaulted loans until after the lender has completed liquidation and SBA has reviewed the underlying documentation supporting the loan. SBAExpress will allow many new lenders to serve small businesses with much needed revolving credit and the turnaround time on these transactions can be within 36 hours.

More detailed information on SBAExpress can be found on the SBA site at this page.

And check into the Community Express program as well at this page.

Women's and Other Minority Pre-Qualification Pilot Loan Program. The Prequalification Pilot Loan Program uses intermediaries to assist prospective borrowers in developing loan applications and securing loans. A Women's Business Development Center or a Small Business Development Company are examples of intermediaries. The loan package is submitted to the SBA and a decision is generally rendered in three days. If approved, the SBA issues a letter of prequalification stating the SBA's intent to guarantee the loan. The maximum loan under this program is $250,000 with a guarantee of 85 percent up to $150,000 and 75 percent for loans over $150,000. The intermediary can usually help the applicant find a competitive lender.

More detailed Prequalification information can be found on the SBA site at this page.