SBA’s Office of Credit Risk Management (OCRM) is responsible for the oversight of SBA lenders and their 7(a) and 504 loan portfolios. OCRM’s mission is to maximize the efficiency of SBA’s lending programs by effectively managing program credit risk, monitoring lender performance, and enforcing lending program requirements.
Our WBD team recently sat in on a webinar specifically for Lender Service Providers (LSP’s) held by Eddie Ledford, Deputy Director of OCRM. Mr. Ledford introduced upcoming risk based reviews for lenders which were expected to begin in the late summer of 2024. He indicated during the discussion that there are approximately 1,100 lenders with active LSP Agreements in the SBA system. The upcoming reviews will be focused on ensuring that LSP’s are educating lenders in an assistant role while lenders remain in control and have oversight of their SBA portfolio.
A look at what SBA plans to examine in their upcoming reviews:
- Lender policy and internal controls; testing of activities
- Vendor management relationships to ensure lender is overseeing the LSP relationship
- Delegations; who has authority to do what (lender vs. LSP)
- Oversight and control – who is running internal operations
- Review of how critical SBA lending is to lender and what impact is/could be to overall portfolio
- Accountability – ensure lender knows what they are accountable for
- Performance of loans once booked onto system
- LSP compensation structure – ensuring compensation comes from lender, not applicant
- Test of all applicable staff in SAM.GOV – lender and LSP; SBA may ask for organizational chart and SAM.GOV searches
It will be crucial that lenders are prepared for these upcoming reviews should the SBA have your institution on its list. See below for a few tips from WBD to get started:
- Have an executed copy of your LSP Agreement readily available (WBD has copies of all agreements for existing clients; if you need a copy, please reach out).
- Ensure SAM.GOV searches have been completed on all employees that are part of the SBA process and are readily available (note that for any transactions WBD has assisted with, copies of our SAM.GOV searches are provided as part of the 10 tab files. If unable to locate, please reach out to WBD and we can provide you with what is needed).
- Have organizational chart readily available upon SBA request
- Ensure vendor management relationships are intact and is familiar with lender/LSP relationship
- Ensure any compensation paid to LSPs has and continues to be paid from lender to LSP and that the applicant is not being charged for these services.
If you are a lender that currently doesn’t utilize an LSP and would like information on how to get started with WBD and what services we offer, please email lenderservices@wbd.org.
OCRM Contact Information:
LSP.Agreements@sba.gov; this email address is monitored by Eric Plummer and Eddie Ledford.
