Site visits are a critical component of the SBA loan origination process because they provide lenders with firsthand insight into the borrower’s business operations, property condition, and collateral. By conducting a site visit, lenders can verify information provided in the application, identify any issues that could impact repayment or collateral value, and ensure compliance with SBA’s due diligence requirements.
For SBA 7(a) loan originations, a lender’s loan documentation must include the following criteria for site visits:
- Change of Ownership for Standard 7(a) Loans, 7(a) Small Loans and SBA Express Loans:
- For complete changes of ownership and complete partner buyouts: A site visit of the business being acquired. The Lender must document in its loan file the date of the site visit as well as comments.
- Change of Ownership for 7(a) Export Express Loans and International Trade Loans:
- A site visit of the business being acquired. The Lender must document in its loan file the date of the site visit as well as comments.
- Additional Appraisal Requirements for all Changes of Ownership for Standard 7(a) Loans:
- For businesses that have been transferred within 36 months prior to the date of the loan application, SBA requires:
- An appraisal of the business real estate that meets the appraisal requirements above; and
- Either a “review” of the appraisal by another appraiser selected directly by the Lender or a site visit by a senior member of the Lender’s staff. The Lender must document the file and include the date of the visit and a description of the items reviewed on site.
- For businesses that have been transferred within 36 months prior to the date of the loan application, SBA requires:
- Additional Appraisal Requirements for all Changes of Ownership for International Trade Loans:
- For businesses that have been transferred within 36 months prior to the date of the loan application and the loan amount is more than $500,000, SBA requires:
- An appraisal of the business real estate that meets the appraisal requirements above; and
- Either a review of the appraisal by another appraiser selected directly by the Lender or a site visit by a senior member of the Lender’s staff. The Lender must document the file and include the date of the visit and a description of the items reviewed on site.
- For businesses that have been transferred within 36 months prior to the date of the loan application and the loan amount is more than $500,000, SBA requires:
Working Capital 7(a) CAPLines, lenders must conduct an annual site visit.
If your lending institution has questions about site visits, or other SBA lending matters, please contact us at SBAQuestions@JellumLaw.com.