SBA SOP 50 10 8, C.Ch2.C.2 — Responsibility for Closing the 504 Loan and Debenture
Verbatim text of SBA SOP 50 10 8 section C.Ch2.C.2 (Responsibility for Closing the 504 Loan and Debenture), effective 2025-06-01. 3 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
SBA lending corpus: SOP 50 10 and the active notices, with the expiry watcher.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, C.Ch2.C.2 — Responsibility for Closing the 504 Loan and Debenture — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 C.Ch2.C.2
2. Responsibility for Closing the 504 Loan and Debenture The CDC is responsible for the 504 loan closing, including compliance with all SBA Loan Program Requirements. Each CDC has its own division of labor and dictates the CDC Counsel’s role. Although SBA counsel is available for advice and assistance, the CDC and its attorney are ultimately responsible for the 504 Loan closing. (13 CFR §§ 120.960 and 120.10) The debenture closing is the joint responsibility of the CDC and SBA. CDC must prepare the documents necessary for closing the debenture. SBA counsel reviews the loan closing package for legal sufficiency and opines whether SBA may guarantee the debenture. (13 CFR § 120.960) All CDC Counsel (including Designated Attorneys and those without Designated status) who submit 504 Loan closing packages to SBA must use the form Opinion of CDC Counsel. The Opinion of CDC Counsel requires the CDC Counsel to acknowledge that SBA will rely upon the Opinion in guaranteeing the Debenture. Additionally, the Opinion requires the CDC Counsel to certify that the CDC Counsel is a licensed, active member, in good standing, of the Bar of the applicable state. If closing deficiencies that cause a loss on the 504 loan occur, SBA may pursue a claim against the CDC Counsel for the closing deficiencies. SBA will also expect the CDC to timely pursue any claims the CDC may have against the CDC Counsel as a result of closing deficiencies. Additionally, all CDC Counsel are considered to be Agents who conduct business with SBA under 13 CFR § 103.1(a). The regulation at 13 CFR § 103.4 provides that SBA may suspend or revoke an Agent’s privilege to conduct business with SBA for good cause, including violations of ethical guidelines which govern the profession or business of the Agent or which are published at any time by SBA. Finally, as set forth in Paragraph C.5.h., Withdrawal of Designated Attorney Status below, good cause for withdrawal of Designated Attorney status includes, among other things, submission of unsatisfactory 504 closing packages. Priority CDCs may not use in-house counsel as its designated attorney. Because the opinion of counsel is only one component of the loan closing, a CDC may not use its in-house counsel to close a 504 loan and obtain an opinion of counsel from an outside designated attorney. The very limited circumstances under which one attorney performs the closing and another attorney provides the opinion of counsel are outlined in the boilerplate opinion of counsel and involve a project in one state and the CDC counsel in another. 3. The Closing Package Types of Loan Closing Packages: i. Regular closing package submitted by either non-Priority CDCs or Priority CDCs who are not using a Designated Attorney; and ii. Expedited closing package submitted by a Priority CDC using a Designated Attorney under the expedited closing process. The Closing Package:
SOP 50 10 8 C.Ch2.C.3.i
i. CDCs and SBA must use SBA Form 2286, “504 Debenture Closing Checklist,” (Checklist) for all 504 debenture closings. The Checklist lists the documents SBA requires to determine whether the debenture can be sold to fund the loan. It is not intended to include all the items the CDC will need to properly close the loan. ii. SBA requires that the CDC submit to SBA counsel for review a completed SBA Form 2286 along with the required items on the Checklist. In rare circumstances if an additional document is necessary, the CDC may submit it along with an explanation of the significance. Mandatory Forms: i. Documents on the Checklist that have an SBA form number
SOP 50 10 8 C.Ch2.C.3.i.ii
ii. Opinion of CDC Counsel; and iii. The SBA-approved environmental indemnification agreement. CDCs may use their own forms for the lien instruments on Project Property and secondary collateral. Those forms must be either state bar-approved forms or approved by SBA counsel prior to submission. The lien instruments on real estate must contain a due-on-sale clause. The closing process for ALP Express Loans is the same as the closing process for PCLP Loans. ALP Express Loans may only be closed using a Designated Attorney in good standing who will execute the required Opinion of CDC counsel indicating that the project loan has been closed in accordance with the E-Tran Terms and Conditions of the 504 loan and SBA Loan Program Requirements for each loan. An ALP CDC must submit an ALP Express Loan closing package using a Designated Attorney under the expedited closing process described in this paragraph. In addition to the items above, the ALP CDC must also submit to SBA counsel all loan modification actions (327 Actions) on the ALP Express Loan, including those authorized under the CDC’s ALP Express delegated authority as outlined in paragraph B.3 of this Chapter. ALP CDCs may not use ALP Express authority to close or service a loan that was not approved using ALP Express delegated authority but must instead process closing and servicing actions through the process that applies to the CDC’s non-delegated loans.
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