Purchase file
Ridgeway Dental Partners PC
7(a) Standard · $850,000.00 · SBA loan number issued January 15, 2025 · purchase request September 15, 2026 · purchase request
- Step 1 of 3: Upload
- Step 2 of 3: Check what we found
- Step 3 of 3: Read the results (you are here)
This is step 3 of 3, the last step.
Rules used
Universal Purchase Package v5.3 for the request; SOP 50 10 7.1 for origination (by loan-number date); SOP 50 57 4 for servicing actions on or after November 1, 2025
Why this version
M5-PKG-001 · UPP v5.3 PDF p.1-16 (footer of every page: "v5.3 Effective August 10, 2026"); 8 tabs + CPC Tabs (p.1); NAGGL 2023-07-28 (UPP eff. 2023-08-01) Rule status: VERIFIED
The rule, as our rulebook reads it: Determine the current SBA purchase-request vehicle: since 2023-08-01 lenders submit the Universal Purchase Package (UPP, 8 tabs) for all 7(a) purchase requests; the ten-tab 'Regular 7(a) Guaranty Purchase Package Tabs' is the legacy structure. Tool must default to UPP and treat ten-tab as legacy/fallback.
Purchase package tabs 8
| Tab | Name | Status | Rules tested |
|---|---|---|---|
| 1 | General Loan Information | Ready | M5-PKG-001, M5-TIME-001, M5-TIME-004, M5-TAB01-002, M5-TIME-006 |
| 2 | Loan Summary | Missing | M5-TAB07-007, M5-TAB02-003, M5-TAB02-001, M5-TAB02-004, M5-TAB02-002 |
| 3 | Transcript of Account | Needs attention | M5-TAB06-003, M5-TAB06-001 |
| 4 | Early Default Determination | Missing | M5-TAB07-003, M5-TAB07-001, M5-TAB07-005, M5-TAB07-002 |
| 5 | Business Eligibility | No rule tested | no rule tested on this file |
| 6 | Obligors | Ready | M5-TAB04-001, M5-TAB04-002 |
| 7 | Use of Proceeds | Ready | M5-TAB05-001, M5-TAB05-003 |
| 8 | Collateral | Ready | M5-TAB04-003, M6-CPC-003, M6-SITE-001, M6-PLAN-001 |
Appended workbook
The credit analysis, rebuilt as live formulas.
We rebuild the spreads, add-backs, debt service coverage, global cash flow, projections against history, a stress test, the equity injection trace, the disbursement tie-out and the dates from the documents in the file. Every number is a formula, and every input carries the file, sheet and source line it came from.
Sheets in the workbook:
- Inputs
- Verify
- Thresholds
- Spreads
- Add-backs
- DSCR
- Global Cash Flow
- Projections vs Historical
- Stress
- Equity Injection Trace
- Disbursement Tie-out
- Dates
- Findings
- Sources
Verification table, from the demonstration file's workbook. Threshold entries cite their source and status; the stress test is a practice, not an SBA requirement.
| Sheet | Cell | Output | Formula | Depends on Inputs (key · locator) |
|---|---|---|---|---|
| Spreads | B4 | Spreads Gross profit 2023 | =B2-B3 | fin.2023.revenue · Historical_Financials.xlsx · sheet Income Statement · cell B4 | fin.2023.cogs · Historical_Financials.xlsx · sheet Income Statement · cell B5 |
| Spreads | B6 | Spreads EBITDA 2023 | =B4-B5 | fin.2023.revenue · Historical_Financials.xlsx · sheet Income Statement · cell B4 | fin.2023.cogs · Historical_Financials.xlsx · sheet Income Statement · cell B5 | fin.2023.opex · Historical_Financials.xlsx · sheet Income Statement · cell B6 |
| Spreads | B9 | Spreads Net income (computed) 2023 | =B6-B7-B8 | fin.2023.revenue · Historical_Financials.xlsx · sheet Income Statement · cell B4 | fin.2023.cogs · Historical_Financials.xlsx · sheet Income Statement · cell B5 | fin.2023.opex · Historical_Financials.xlsx · sheet Income Statement · cell B6 | fin.2023.interest · Historical_Financials.xlsx · sheet Income Statement · cell B7 | fin.2023.depreciation · Historical_Financials.xlsx · sheet Income Statement · cell B8 |
| Spreads | C4 | Spreads Gross profit 2024 | =C2-C3 | fin.2024.revenue · Historical_Financials.xlsx · sheet Income Statement · cell C4 | fin.2024.cogs · Historical_Financials.xlsx · sheet Income Statement · cell C5 |
| Spreads | C6 | Spreads EBITDA 2024 | =C4-C5 | fin.2024.revenue · Historical_Financials.xlsx · sheet Income Statement · cell C4 | fin.2024.cogs · Historical_Financials.xlsx · sheet Income Statement · cell C5 | fin.2024.opex · Historical_Financials.xlsx · sheet Income Statement · cell C6 |
| Spreads | C9 | Spreads Net income (computed) 2024 | =C6-C7-C8 | fin.2024.revenue · Historical_Financials.xlsx · sheet Income Statement · cell C4 | fin.2024.cogs · Historical_Financials.xlsx · sheet Income Statement · cell C5 | fin.2024.opex · Historical_Financials.xlsx · sheet Income Statement · cell C6 | fin.2024.interest · Historical_Financials.xlsx · sheet Income Statement · cell C7 | fin.2024.depreciation · Historical_Financials.xlsx · sheet Income Statement · cell C8 |
| Spreads | D4 | Spreads Gross profit 2025 | =D2-D3 | fin.2025.revenue · Historical_Financials.xlsx · sheet Income Statement · cell D4 | fin.2025.cogs · Historical_Financials.xlsx · sheet Income Statement · cell D5 |
| Spreads | D6 | Spreads EBITDA 2025 | =D4-D5 | fin.2025.revenue · Historical_Financials.xlsx · sheet Income Statement · cell D4 | fin.2025.cogs · Historical_Financials.xlsx · sheet Income Statement · cell D5 | fin.2025.opex · Historical_Financials.xlsx · sheet Income Statement · cell D6 |
Findings, worst first
26 findings, every one produced by the review engine on this file (engine output ridgeway-dental, digest 889d401d1a7b). 51 rules in scope could not be tested on born-digital documents in this version and 47 do not apply to this file; neither is shown as a finding.
IRS transcripts (4506-C) are missing
Status: Missing SBA can deny or reduce the guaranty for this
- What we checked
- IRS tax transcripts verifying the financial information relied on are in the purchase file
- What we found
- No IRS transcripts in the file.
- Where in the file
- not in the file
- Why it matters
- Failure to verify tax information is a common reason for full denial on early defaults.
- Why believe this
- 16 independent sources name this failure (D-030). SBA can: deny the guaranty · call the payment improper
- SBA NGPC guaranty purchase pages (PR-S02, PR-S03) (SBA-PAGE): IRS income tax verification often missing or incorrect
- OIG 26-14 (OIG): did not request, receive and reconcile IRS transcripts (31 in bucket)
- OIG 26-12 (OIG): IRS tax verification, 4 loans, $1,500,000.00
- OIG ROM 11-07 (OIG): IRS verification among gaps
- Starfield 2024 IRS tax transcripts (PR-S18 = TW-S31) (LAW-FIRM): no record, discrepancies, 10 business days then Second Request
If it cannot be fixed: Where transcripts cannot be obtained, document the second request and proof of filing/payment; SBA still treats missing verification on an early default as full-denial exposure.
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.6 (Tab 4); IVES/4506-C mechanics: Starfield 2024-03 (secondary) — rule status PRACTICE
- How to fix it
- Locate the transcripts obtained at origination (IVES / 4506-C or 8821) and add them to the package.
- If none were obtained, order them now and write a discrepancy reconciliation.
- Disclose the gap in the package narrative; do not submit silently.
What does this mean?
SBA checks that the lender checked the tax returns with the IRS before lending.
The rule we checked against
M5-TAB07-003 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.6 (Tab 4); IVES/4506-C mechanics: Starfield 2024-03 (secondary) Rule status: PRACTICE
The rule, as our rulebook reads it: UPP Tab 4 (verification of financial information): attach IRS tax transcripts or business tax returns, as the SOP 50 10 program-type rules in effect at approval require, for the last 3 years in operation (all years if start-up). For loans over $350,000.00 also attach reconciliation of applicant financials with resolution of discrepancies, interim financial statements, and any IRS filing extension with evidence of estimated-tax payment. IVES/4506-C/8821 mechanics remain secondary-source.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB07-003.
Missing: historical financial statements
Status: Missing Commonly cited in SBA reviews
- What we checked
- Whether the file holds: historical financial statements
- What we found
- Not found: historical financial statements. Not checked in v0: Loan summary narrative.
- Where in the file
- not in the file
- Why it matters
- Regardless of early-default status the current UPP requires the loan summary and supporting underwriting/financials/equity documentation with the request (2023 version 'evolved').
- Why believe this
- 5 corpus entries name this failure.
- D-131 (deficiencies): Early-default file (default within 18 months of final disbursement) not built to the highest-scrutiny standard (MULTI-SOURCE, 11 sources)
- CA-013 (CREDIT-ANALYSIS-STANDARDS): SOP 8.1 DSC basis: last fiscal year-end **or** average of the last two fiscal year-ends, with supportable adjustments; projections may be evaluated but may not satisfy th…
- AE-005 (CREDIT-ANALYSIS-STANDARDS): Historical and interim DSCR inadequate; projections without reasonable assumptions
- OC-038 (OCRM-PARRIS-CORPUS): Financial projections unsupported
- PI-001 (PIIA-CORPUS): Repayment ability not supported by verified financials or reasonable projections
- Rule status
- Starfield 2026-02 — rule status PRACTICE
- How to fix it
- Add the historical financial statements to the file.
- Re-run the review.
What does this mean?
On an early default SBA wants the financial statements the lender relied on.
The rule we checked against
M5-TAB07-007 · Starfield 2026-02 Rule status: PRACTICE
The rule, as our rulebook reads it: Regardless of early-default status the current UPP requires the loan summary and supporting underwriting/financials/equity documentation with the request (2023 version 'evolved').
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB07-007.
Early default: the loan defaulted 10 months after final disbursement
Status: Needs attention SBA can deny or reduce the guaranty for this
- What we checked
- Months from final disbursement to first uncured default (early default if under 18)
- What we found
- Final disbursement 2025-04-02, default 2026-02-10: 10 months (under 18).
- Where in the file
- Loan_System_Export_Ridgeway.csv, row 2, column 11; Loan_System_Export_Ridgeway.csv, row 2, column 12
- Why it matters
- An early default gets SBA's full origination review: eligibility, repayment ability, equity injection and IRS verification are all re-tested.
- Why believe this
- 11 independent sources name this failure (D-131). SBA can: deny the guaranty · call the payment improper
- SBA NGPC guaranty purchase pages (PR-S02, PR-S03) (SBA-PAGE): early defaults with missing equity or IRS verification
- Windsor Advantage top 6 repair/denial reasons (PR-S04 = TW-S (LSP): early default within 18 months
- OIG 12-18 (OIG): high-dollar early defaults
- OIG 12-11R (OIG): early-defaulted loans
- OIG 19-22 (OIG): early-default loans: 5 denial recommendations
If it cannot be fixed: Same as the underlying defect; the early-default label removes the benefit of doubt.
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.6 (Tab 4) — rule status VERIFIED
- How to fix it
- Complete the Early Default Determination tab with the origination file.
- Include the credit memo, IRS transcripts and equity-injection evidence; each is re-examined.
- Write a short narrative of what caused the default.
What does this mean?
When a loan fails fast, SBA asks whether it should have been made at all.
The rule we checked against
M5-TAB07-001 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.6 (Tab 4) Rule status: VERIFIED
The rule, as our rulebook reads it: Early default = default within 18 months of the initial disbursement. If the final disbursement was more than 6 months after the initial disbursement, the 18 months run from the final disbursement (a revolving line is fully disbursed at initial disbursement). A borrower who cures and makes scheduled payments for 12 months after the 18 months (30 months) is not an early default. Tab 4 collects the dates and the early-default events.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB07-001.
The equity injection cannot be traced to its source
Status: Needs attention SBA can deny or reduce the guaranty for this
- What we checked
- Equity injection: authorization requirement matched to settlement sheet credit matched to source deposits in bank statements
- What we found
- required 150,000 per the authorization; settlement credit 150,000; no source bank statements. Gap: no bank statement traces the money to its source.
- Where in the file
- Loan_Authorization_Ridgeway.docx, paragraph 5; SBA_Form_1050_Settlement_Sheet.docx, paragraph 2
- Why it matters
- A settlement-sheet credit alone is the borrower's statement; SBA expects to see where the cash came from.
- Why believe this
- 27 independent sources name this failure (D-048). SBA can: deny the guaranty · call the payment improper
- OIG ROM 10-12 (OIG): missing $52,589.00 equity injection
- OIG ROM 11-07 (OIG): equity injection among gaps in 24 of 60 loans
- OIG 13-16R (OIG): equity injection at purchase review
- OIG 14-09 (OIG): equity injection problems in 3 loans
- OIG 18-23 (OIG): insufficient evidence of equity injection
If it cannot be fixed: At purchase, reconstruct the trail from bank records the borrower can still pull (source statements, transfer records, closing statements) and disclose what remains missing in the package narrative. Starfield advises a post-closing file review while the borrow
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.7 (Tab 4) — rule status VERIFIED
- How to fix it
- Obtain the bank statements for the months before closing showing the funds and the transfer.
- Add wire confirmations or cancelled checks linking the source account to the closing.
- Tie the amounts in the workbook's Equity Injection Trace sheet.
What does this mean?
It is not enough that the money showed up at closing. SBA wants to know where it came from.
The rule we checked against
M5-TAB07-005 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.7 (Tab 4) Rule status: VERIFIED
The rule, as our rulebook reads it: UPP Tab 4 equity-injection worksheet applies when an injection was required by the SOP 50 10 at approval or by the credit memo: total project cost; per type (cash, asset, standby debt, other) required vs actual amount, variance and source; verification of the injection and its source where the Lender or SBA required it; standby creditor's agreement and notes if standby debt was used.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB07-005.
Transcript interest rate is in percent format
Status: Needs attention A citation or return risk
- What we checked
- Interest-rate fields in the transcript use decimal format (.1025), not percent (10.25%)
- What we found
- Rate entered as "10.25%".
- Where in the file
- SBA_1149_Transcript_of_Account.xlsx, sheet Transcript, cell B4
- Why it matters
- The current UPP transcript expects decimals; percent entries can miscompute interest.
- Why believe this
- 1 independent sources name this failure (D-123). SBA can: return the package
- SBA NGPC guaranty purchase pages (PR-S02, PR-S03) (SBA-PAGE): transcript not signed or not in 1149 format
If it cannot be fixed: Resubmit.
- Rule status
- Starfield & Smith 2026-02 (UPP Tab 4 note) — rule status PRACTICE
- How to fix it
- Re-enter the rate as 0.1025.
- Recheck any interest totals the transcript computes from it.
What does this mean?
A formatting rule, but it costs weeks when the package comes back.
The rule we checked against
M5-TAB06-003 · Starfield & Smith 2026-02 (UPP Tab 4 note) Rule status: PRACTICE
The rule, as our rulebook reads it: Interest rate fields in current UPP transcript use decimal format (e.g., .0525), not percent.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB06-003.
Early defaults receive heightened SBA review of lender financials/projections, underwriting and equity injecti
Status: Needs a person
- What we checked
- Whether the file holds: credit memo
- What we found
- Present: credit memo. Presence only; content not tested in v0.
- Where in the file
- Credit_Memo_Ridgeway.docx
- Why it matters
- Early defaults receive heightened SBA review of lender financials/projections, underwriting and equity injection; SBA may deny the full guaranty where the loan was imprudently underwritten.
- Why believe this
- 23 independent sources name this failure (D-022). SBA can: deny the guaranty · call the payment improper
- OIG 11-16 (OIG): bank did not adequately assess repayment ability (Huntington Learning Center loans)
- OIG 12-18 (OIG): detailed repayment analysis needed on high-dollar early defaults
- OIG 13-16R (OIG): inadequate assurance of repayment ability
- OIG 14-09 (OIG): unverified repayment ability
- OIG 16-19 (OIG): did not assess repayment ability and size
If it cannot be fixed: At purchase, put the analysis in front of SBA anyway: rebuild the memo from documents dated before approval, show the ratio and the basis, and propose a repair sized to any shortfall. Do not backdate; a late memo is read as a late memo.
- Rule status
- SBA NGPC page; Starfield 2024-03; Windsor Advantage #2 — rule status VERIFIED
- How to fix it
- A person reviews the content against the rule.
What does this mean?
On an early default SBA re-reads the underwriting. A person should read it first.
The rule we checked against
M5-TAB07-002 · SBA NGPC page; Starfield 2024-03; Windsor Advantage #2 Rule status: VERIFIED
The rule, as our rulebook reads it: Early defaults receive heightened SBA review of lender financials/projections, underwriting and equity injection; SBA may deny the full guaranty where the loan was imprudently underwritten.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB07-002.
A person must compare the memo to the loan as closed
Status: Needs a person
- What we checked
- The credit memo matches the loan as closed: amount and equity injection (terms, collateral, guarantors by a person)
- What we found
- Amount and equity injection agree. Terms, collateral and guarantors need a reader.
- Where in the file
- Credit_Memo_Ridgeway.docx, paragraph 2; Loan_Authorization_Ridgeway.docx, paragraph 3; Credit_Memo_Ridgeway.docx, paragraph 3; Loan_Authorization_Ridgeway.docx, paragraph 5
- Why it matters
- Mismatch between memo and closing is a repair driver.
- Why believe this
- 9 independent sources name this failure (D-086). SBA can: deny the guaranty · repair (reduce) the guaranty
- Windsor Advantage top 6 repair/denial reasons (PR-S04 = TW-S (LSP): credit memo mismatch on early default
- Starfield 2019 intervening liens (PR-S11 = TW-S25) (LAW-FIRM): credit memo vs authorization lien position mismatch
- Starfield 2025 be audit ready (PI-S28) (LAW-FIRM): change memos
- Coleman top 20 reasons (TW-S03 = TW-S41) (LSP): approval, memo and closing docs not reconciled
- NAGGL 2026 annual conference (TW-S35) (TRADE-ASSOC): credit memo alignment
If it cannot be fixed: At purchase, disclose the gap in the package narrative and propose a repair sized to any loss it caused. Where the closing paper exists but is unrecorded or unsigned, cure it and say so; where the paper never existed, expect repair or denial.
- Rule status
- SBA NGPC review description (compliance with authorization/prudent lending); Starfield UPP 2024 (early default focus) — rule status PRACTICE
- How to fix it
- A reviewer compares memo terms, collateral and guarantors to the closing binder.
What does this mean?
If the loan changed after the memo, SBA wants to see that someone approved the change.
The rule we checked against
M5-TAB02-003 · SBA NGPC review description (compliance with authorization/prudent lending); Starfield UPP 2024 (early default focus) Rule status: PRACTICE
The rule, as our rulebook reads it: Credit memo must match the loan as closed (amount, terms, collateral, guarantors, equity injection); SBA compares memo to authorization.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB02-003.
Package is the Universal Purchase Package
Status: Ready
- What we checked
- The purchase request uses the Universal Purchase Package (UPP), required since 2023-08-01
- What we found
- Package version: UPP v5.3.
- Where in the file
- Loan_System_Export_Ridgeway.csv, row 2, column 14
- Why it matters
- The ten-tab package is legacy; SBA expects the UPP.
- Why believe this
- 2 independent sources name this failure (D-122). SBA can: return the package
- SBA NGPC guaranty purchase pages (PR-S02, PR-S03) (SBA-PAGE): no tabs or not in checklist order
- Starfield 2020 UPP tabs (PR-S27) (LAW-FIRM): UPP tabs
If it cannot be fixed: Resubmit.
- Rule status
- UPP v5.3 PDF p.1-16 (footer of every page: "v5.3 Effective August 10, 2026"); 8 tabs + CPC Tabs (p.1); NAGGL 2023-07-28 (UPP eff. 2023-08-01) — rule status VERIFIED
What does this mean?
SBA's purchase request form is the Universal Purchase Package. Older packages are returned.
The rule we checked against
M5-PKG-001 · UPP v5.3 PDF p.1-16 (footer of every page: "v5.3 Effective August 10, 2026"); 8 tabs + CPC Tabs (p.1); NAGGL 2023-07-28 (UPP eff. 2023-08-01) Rule status: VERIFIED
The rule, as our rulebook reads it: Determine the current SBA purchase-request vehicle: since 2023-08-01 lenders submit the Universal Purchase Package (UPP, 8 tabs) for all 7(a) purchase requests; the ten-tab 'Regular 7(a) Guaranty Purchase Package Tabs' is the legacy structure. Tool must default to UPP and treat ten-tab as legacy/fallback.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-PKG-001.
Authorization and modifications are present
Status: Ready
- What we checked
- The final SBA Loan Authorization and every modification
- What we found
- Authorization plus 1 modification(s): Loan_Authorization_Ridgeway.docx, Modification_1_Loan_Authorization_Ridgeway.docx.
- Where in the file
- Loan_Authorization_Ridgeway.docx; Modification_1_Loan_Authorization_Ridgeway.docx
- Why it matters
- A person should still confirm no later modification exists outside the file.
- Why believe this
- 4 corpus entries name this failure.
- OC-024 (OCRM-PARRIS-CORPUS): Loan authorization not accurate or inconsistent with the credit memo
- PR-019 (PURCHASE-REPAIR-DENIAL-CORPUS): Material non-compliance with terms of the Loan Authorization
- TW-005 (TRAINING-CORPUS): Credit memo, authorization, closing docs and file do not agree
- PI-012 (PIIA-CORPUS): Use of proceeds outside authorized purposes (own non-SBA debt refinanced, disbursement outside limits, undocumented construction draws)
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1) — rule status VERIFIED
What does this mean?
Every change to the deal has to be in the package.
The rule we checked against
M5-TAB02-001 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1) Rule status: VERIFIED
The rule, as our rulebook reads it: UPP Tab 1 (not Tab 2): attach the Loan Authorization / Digital E-Tran Approval including all modifications. (Legacy ten-tab structure put it in Tab 2.)
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB02-001.
Loan must be closed per the SBA authorization
Status: Ready
- What we checked
- Whether the file holds: SBA Loan Authorization
- What we found
- Present: SBA Loan Authorization. Presence only; content not tested in v0.
- Where in the file
- Loan_Authorization_Ridgeway.docx; Modification_1_Loan_Authorization_Ridgeway.docx
- Why it matters
- Loan must be closed per the SBA authorization; material non-compliance with authorization/Loan Program Requirements releases SBA from liability.
- Why believe this
- 5 corpus entries name this failure.
- D-085 (deficiencies): Loan closed on terms different from the SBA Loan Authorization (conditions, amount, collateral, maturity) (MULTI-SOURCE, 6 sources)
- OC-024 (OCRM-PARRIS-CORPUS): Loan authorization not accurate or inconsistent with the credit memo
- PR-019 (PURCHASE-REPAIR-DENIAL-CORPUS): Material non-compliance with terms of the Loan Authorization
- TW-005 (TRAINING-CORPUS): Credit memo, authorization, closing docs and file do not agree
- PI-012 (PIIA-CORPUS): Use of proceeds outside authorized purposes (own non-SBA debt refinanced, disbursement outside limits, undocumented construction draws)
- Rule status
- 13 CFR 120.524(a)(1)-(3) — rule status VERIFIED
What does this mean?
SBA checks that the loan closed the way it was authorized.
The rule we checked against
M5-TAB02-004 · 13 CFR 120.524(a)(1)-(3) Rule status: VERIFIED
The rule, as our rulebook reads it: Loan must be closed per the SBA authorization; material non-compliance with authorization/Loan Program Requirements releases SBA from liability.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB02-004.
Tab 4 Legal Documentation: executed note, security agreements, guaranties, UCC filings/mortgages with recordin
Status: Ready
- What we checked
- Whether the file holds: SBA Note (Form 147), guaranty (Form 148), UCC filing
- What we found
- Present: SBA Note (Form 147), guaranty (Form 148), UCC filing. Presence only; content not tested in v0. Not checked in v0: Security instruments, Deferment agreements.
- Where in the file
- SBA_Note_Form_147.docx; SBA_Form_148_Guaranty_Okonkwo-Hale.docx; UCC_Financing_Statement.docx
- Why it matters
- Tab 4 Legal Documentation: executed note, security agreements, guaranties, UCC filings/mortgages with recording evidence, business appraisal/valuation, deferment agreements; assignment form moved to Tab 9 in 2020.
- Why believe this
- 5 corpus entries name this failure.
- D-124 (deficiencies): Post-default UCC searches missing or wrong (SINGLE-SOURCE, 1 sources)
- PI-017 (PIIA-CORPUS): Lien or collateral not obtained, not perfected, or wrong position
- PR-066 (PURCHASE-REPAIR-DENIAL-CORPUS): Recoveries applied to lender's own loan when guaranty loan had priority
- TW-045 (TRAINING-CORPUS): Intervening liens after closing
- CA-002 (CREDIT-ANALYSIS-STANDARDS): Small Loan analysis must include: (i) debt service coverage, (ii) two most recent months of commercial bank activity or statements, (iii) projected earnings (if applicabl…
- Rule status
- Starfield & Smith 2020-03-25; SBA tab name 'Legal Documentation' — rule status PRACTICE
What does this mean?
SBA wants the signed Note, the guaranties and the lien filings in the package.
The rule we checked against
M5-TAB04-001 · Starfield & Smith 2020-03-25; SBA tab name 'Legal Documentation' Rule status: PRACTICE
The rule, as our rulebook reads it: Tab 4 Legal Documentation: executed note, security agreements, guaranties, UCC filings/mortgages with recording evidence, business appraisal/valuation, deferment agreements; assignment form moved to Tab 9 in 2020.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB04-001.
Documents must be completed and executed per the SBA Loan Authorization
Status: Ready
- What we checked
- Whether the file holds: SBA Note (Form 147), SBA Loan Authorization, transcript of account (Form 1149)
- What we found
- Present: SBA Note (Form 147), SBA Loan Authorization, transcript of account (Form 1149). Presence only; content not tested in v0.
- Where in the file
- SBA_Note_Form_147.docx; Loan_Authorization_Ridgeway.docx; Modification_1_Loan_Authorization_Ridgeway.docx; SBA_1149_Transcript_of_Account.xlsx
- Why it matters
- Documents must be completed and executed per the SBA Loan Authorization; note terms (rate, payment, maturity) must equal authorization terms and Transcript of Account terms.
- Why believe this
- 5 corpus entries name this failure.
- D-071 (deficiencies): Closing file cannot evidence compliant origination and closing when SBA asks (MULTI-SOURCE, 26 sources)
- OC-024 (OCRM-PARRIS-CORPUS): Loan authorization not accurate or inconsistent with the credit memo
- PR-019 (PURCHASE-REPAIR-DENIAL-CORPUS): Material non-compliance with terms of the Loan Authorization
- TW-005 (TRAINING-CORPUS): Credit memo, authorization, closing docs and file do not agree
- PI-012 (PIIA-CORPUS): Use of proceeds outside authorized purposes (own non-SBA debt refinanced, disbursement outside limits, undocumented construction draws)
- Rule status
- Coleman Report ten-tab page (documents 'executed per the SBA loan authorization') — rule status PRACTICE
What does this mean?
Without the signed Note, SBA cannot see what the borrower promised to pay.
The rule we checked against
M5-TAB04-002 · Coleman Report ten-tab page (documents 'executed per the SBA loan authorization') Rule status: PRACTICE
The rule, as our rulebook reads it: Documents must be completed and executed per the SBA Loan Authorization; note terms (rate, payment, maturity) must equal authorization terms and Transcript of Account terms.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB04-002.
The UCC debtor name matches the borrower's legal name
Status: Ready
- What we checked
- The debtor name on the UCC-1 against the borrower's legal name
- What we found
- UCC-1 debtor and the borrower's legal name agree.
- Where in the file
- UCC_Financing_Statement.docx, paragraph 1; Loan_Authorization_Ridgeway.docx, paragraph 1
- Why it matters
- Why believe this
- 5 corpus entries name this failure.
- D-072 (deficiencies): Required lien position not obtained (MULTI-SOURCE, 10 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- AE-016 (CREDIT-ANALYSIS-STANDARDS): Repayment ability not adequately supported by cash flow; pre-existing tax lien not addressed; business-failure explanation unsupported
- OC-008 (OCRM-PARRIS-CORPUS): Liens not properly recorded/perfected or not legally enforceable; no post-closing searches where liens not insured
- OIG 19-15 (OIG-CORPUS): Lender did not document repayment ability, eligibility, collateral, equity injection, debt refinance (ORIGINATION/CLOSING)
- Rule status
- Innovative Financing Solutions (top repair/denial reasons); Windsor Advantage #4; Coleman Report repairs page — rule status PRACTICE
What does this mean?
The UCC filing is how the lender's lien on business assets is made public. SBA wants to see it.
The rule we checked against
M5-TAB04-003 · Innovative Financing Solutions (top repair/denial reasons); Windsor Advantage #4; Coleman Report repairs page Rule status: PRACTICE
The rule, as our rulebook reads it: Required lien positions obtained and perfected as authorized; failure to perfect, or perfecting in the wrong position, is a leading repair reason.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB04-003.
Tab 5 Disbursements: documentation supporting each disbursement as required by the SOP 50 10 in effect at the
Status: Ready
- What we checked
- Whether the file holds: settlement sheet (Form 1050)
- What we found
- Present: settlement sheet (Form 1050). Presence only; content not tested in v0. Not checked in v0: Invoices, checks, wires per disbursement.
- Where in the file
- SBA_Form_1050_Settlement_Sheet.docx
- Why it matters
- Tab 5 Disbursements: documentation supporting each disbursement as required by the SOP 50 10 in effect at the time of the guaranty purchase request (UPP v Dec-2024 language), tied to authorized use of proceeds.
- Why believe this
- 5 corpus entries name this failure.
- D-091 (deficiencies): Proceeds disbursed inconsistently with the authorization or credit-memo use of funds (MULTI-SOURCE, 18 sources)
- OIG ROM 11-06 (OIG-CORPUS): Repayment ability, ineligible use of proceeds, questionable eligibility, improper guaranty amount; SBA officers missed 3 (ORIGINATION/PURCHASE)
- CA-016 (CREDIT-ANALYSIS-STANDARDS): Global cash flow: consider affiliates' cash flow and guarantors' personal obligations. Whether the SOP text *mandates* a global cash flow analysis could not be confirmed.…
- AE-003 (CREDIT-ANALYSIS-STANDARDS): Unsupported add-backs (personal income, guaranteed payments)
- OC-017 (OCRM-PARRIS-CORPUS): Working-capital disbursements not monitored or documented (other than normal operating expenses)
- Rule status
- Starfield 2025-01 (UPP Tab 7 Disbursement Documentation); SBA tab name — rule status PRACTICE
What does this mean?
Every dollar paid out at closing needs a paper behind it.
The rule we checked against
M5-TAB05-001 · Starfield 2025-01 (UPP Tab 7 Disbursement Documentation); SBA tab name Rule status: PRACTICE
The rule, as our rulebook reads it: Tab 5 Disbursements: documentation supporting each disbursement as required by the SOP 50 10 in effect at the time of the guaranty purchase request (UPP v Dec-2024 language), tied to authorized use of proceeds.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB05-001.
Form 1149 transcript is present and signed
Status: Ready
- What we checked
- A signed Form 1149 transcript of account
- What we found
- Signed: Yes.
- Where in the file
- SBA_1149_Transcript_of_Account.xlsx, sheet Transcript, cell B5
- Why it matters
- Why believe this
- 1 independent sources name this failure (D-123). SBA can: return the package
- SBA NGPC guaranty purchase pages (PR-S02, PR-S03) (SBA-PAGE): transcript not signed or not in 1149 format
If it cannot be fixed: Resubmit.
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.5 (Tab 3) — rule status VERIFIED
What does this mean?
SBA's ledger of the loan must be signed by the lender.
The rule we checked against
M5-TAB06-001 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.5 (Tab 3) Rule status: VERIFIED
The rule, as our rulebook reads it: UPP Tab 3: attach a certified copy of the Transcript of Account itemizing each disbursement, payment and recovery. SBA Form 1149 is the Agency's preferred form; a lender equivalent is acceptable. Identify each Section 1112 debt-relief payment; if the ending balance does not match the 1502, explain.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB06-001.
Lender may demand purchase only if the borrower is in default on any installment for more than 60 calendar day
Status: Ready
- What we checked
- Whether the file holds: transcript of account (Form 1149)
- What we found
- Present: transcript of account (Form 1149). Presence only; content not tested in v0. Not checked in v0: Date of first uncured default, Cure evidence if any.
- Where in the file
- SBA_1149_Transcript_of_Account.xlsx
- Why it matters
- Lender may demand purchase only if the borrower is in default on any installment for more than 60 calendar days (or less if SBA agrees) and default is uncured; also upon federal bankruptcy once 60 days have passed since last full installment. Right lapses if borrower cures before the request.
- Why believe this
- 4 corpus entries name this failure.
- CA-020 (CREDIT-ANALYSIS-STANDARDS): IRS tax transcript verification (Form 4506-C) required. S06 says required for all loans regardless of size under SOP 8; S05 says "reimposition of tax transcript verificat…
- AE-017 (CREDIT-ANALYSIS-STANDARDS): IRS transcripts not requested, received, and reconciled
- OC-001 (OCRM-PARRIS-CORPUS): Lender did not request, receive and reconcile IRS tax transcripts (4506-C) for the borrower/principals/business
- OIG ROM 11-07 (OIG-CORPUS): 24 of 60 (40%): creditworthiness, eligibility, equity injection, use of proceeds, IRS verification (ORIGINATION/CLOSING)
- Rule status
- 13 CFR 120.520(a)(1) — rule status VERIFIED
What does this mean?
The lender can ask SBA to pay only after the borrower is actually in default.
The rule we checked against
M5-TIME-001 · 13 CFR 120.520(a)(1) Rule status: VERIFIED
The rule, as our rulebook reads it: Lender may demand purchase only if the borrower is in default on any installment for more than 60 calendar days (or less if SBA agrees) and default is uncured; also upon federal bankruptcy once 60 days have passed since last full installment. Right lapses if borrower cures before the request.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TIME-001.
The request is inside the 180-day window (0 days after maturity)
Status: Ready
- What we checked
- Days from loan maturity to the purchase-request date (limit 180)
- What we found
- Maturity 2035-04-02 (maturity derived from final disbursement plus term); request 2026-09-15; -3121 days.
- Where in the file
- Loan_System_Export_Ridgeway.csv, row 2, column 11; Loan_System_Export_Ridgeway.csv, row 2, column 6; Loan_System_Export_Ridgeway.csv, row 2, column 13
- Why it matters
- Why believe this
- 5 corpus entries name this failure.
- D-120 (deficiencies): Purchase not requested within 180 days after maturity (or after liquidation where the exception applies) (MULTI-SOURCE, 4 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- OIG 24-20 (OIG-CORPUS): SBA failed to report charged-off PPP loans; weak oversight of lender communication and collection (PURCHASE/LIQUIDATION)
- PI-020 (PIIA-CORPUS): Liquidation deficiencies (site visits late, disposition and recovery misapplied)
- PR-017 (PURCHASE-REPAIR-DENIAL-CORPUS): Purchase not requested within 180 days after maturity (or after liquidation where applicable)
- Rule status
- 13 CFR 120.524(a)(8) — rule status VERIFIED
What does this mean?
This check passed on the documents in the file. The page it rests on is shown above.
The rule we checked against
M5-TIME-004 · 13 CFR 120.524(a)(8) Rule status: VERIFIED
The rule, as our rulebook reads it: Purchase request must be made within 180 days after loan maturity (exception: liquidation or debt collection litigation ongoing); otherwise SBA is released from liability.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TIME-004.
Liens must be maintained/renewed
Status: Ready
- What we checked
- Whether the file holds: UCC filing
- What we found
- Present: UCC filing. Presence only; content not tested in v0. Not checked in v0: Lien tickler.
- Where in the file
- UCC_Financing_Statement.docx
- Why it matters
- Liens must be maintained/renewed (e.g., UCC continuation within 6-month window); improper lien renewal/lapse is a documented repair reason.
- Why believe this
- 5 corpus entries name this failure.
- D-102 (deficiencies): UCC filing not continued (lapse) on collateral worth keeping (MULTI-SOURCE, 3 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- AE-016 (CREDIT-ANALYSIS-STANDARDS): Repayment ability not adequately supported by cash flow; pre-existing tax lien not addressed; business-failure explanation unsupported
- OC-008 (OCRM-PARRIS-CORPUS): Liens not properly recorded/perfected or not legally enforceable; no post-closing searches where liens not insured
- OIG 19-15 (OIG-CORPUS): Lender did not document repayment ability, eligibility, collateral, equity injection, debt refinance (ORIGINATION/CLOSING)
- Rule status
- Windsor Advantage #5 ('improper lien renewals'); UCC statute not cited here — rule status PRACTICE
What does this mean?
The lender's lien on business assets has to be on file to collect against it.
The rule we checked against
M6-CPC-003 · Windsor Advantage #5 ('improper lien renewals'); UCC statute not cited here Rule status: PRACTICE
The rule, as our rulebook reads it: Liens must be maintained/renewed (e.g., UCC continuation within 6-month window); improper lien renewal/lapse is a documented repair reason.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M6-CPC-003.
The site visit came 38 days after the default
Status: Ready
- What we checked
- Days from the payment-default date to the site-visit date (limit 60)
- What we found
- Default 2026-02-10; visit 2026-03-20; 38 days.
- Where in the file
- Loan_System_Export_Ridgeway.csv, row 2, column 12; Site_Visit_Report.docx, paragraph 2
- Why it matters
- Why believe this
- 5 corpus entries name this failure.
- D-113 (deficiencies): Post-default site visit not made, or made late (60 days after payment default, 15 days after a non-payment default) (MULTI-SOURCE, 6 sources)
- OIG ROM 10-12 (OIG-CORPUS): 4 loans: key manager with felony (Form 912), weak valuations and site visits on ownership change, affiliates not assessed, guaranty limit exceeded by $86,176.00 missing $52.00…
- PI-020 (PIIA-CORPUS): Liquidation deficiencies (site visits late, disposition and recovery misapplied)
- PR-064 (PURCHASE-REPAIR-DENIAL-CORPUS): Site visit not done or late
- TW-016 (TRAINING-CORPUS): Site visit not made within deadline after default
- Rule status
- SBA NGPC liquidation process page — rule status VERIFIED
What does this mean?
Within 60 days of a missed payment that is not cured, someone from the lender visits the business.
The rule we checked against
M6-SITE-001 · SBA NGPC liquidation process page Rule status: VERIFIED
The rule, as our rulebook reads it: Site visit must be performed within 60 days of an unremedied payment default, or sooner if assets of significant value could easily be moved or depleted. (SBA page statement is under SOP 50 57 series; confirm section in SOP 50 57 4.)
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M6-SITE-001.
Demand amounts must tie to the Transcript of Account and Loan Authorization.
Status: Ready
- What we checked
- Whether the file holds: transcript of account (Form 1149)
- What we found
- Present: transcript of account (Form 1149). Presence only; content not tested in v0. Not checked in v0: Demand letter figures.
- Where in the file
- SBA_1149_Transcript_of_Account.xlsx
- Why it matters
- Demand amounts (principal, interest, per diem, guaranty %) must tie to the Transcript of Account (Tab 6) and Loan Authorization (Tab 2).
- Why believe this
- 5 corpus entries name this failure.
- D-132 (deficiencies): Purchase request calculations (principal, interest, per diem) do not tie to the transcript and demand letter (INFERRED, 3 sources)
- CA-016 (CREDIT-ANALYSIS-STANDARDS): Global cash flow: consider affiliates' cash flow and guarantors' personal obligations. Whether the SOP text *mandates* a global cash flow analysis could not be confirmed.…
- AE-003 (CREDIT-ANALYSIS-STANDARDS): Unsupported add-backs (personal income, guaranteed payments)
- OC-024 (OCRM-PARRIS-CORPUS): Loan authorization not accurate or inconsistent with the credit memo
- OIG 26-09 (OIG-CORPUS): Incomplete root-cause and tolerable-rate publication; risk assessments missing; PPP guaranty-purchase sampling not reliable; corrective action plans undocumented; targets…
- Rule status
- Not stated in UPP v5.3 (texts/UPP-v5.3.md p.5 asks only for an explanation when the ending balance on the Transcript of Account does not match the 1502); Tab 1 demand amounts tying to Tab 3 and the Loan Authorization is practice — rule status PRACTICE
What does this mean?
The amount the lender asks SBA to pay has to tie to the loan ledger and the Authorization.
The rule we checked against
M5-TAB01-002 · Not stated in UPP v5.3 (texts/UPP-v5.3.md p.5 asks only for an explanation when the ending balance on the Transcript of Account does not match the 1502); Tab 1 demand amounts tying to Tab 3 and the Loan Authorization is practice Rule status: PRACTICE
The rule, as our rulebook reads it: Demand amounts (principal, interest, per diem, guaranty %) must tie to the Transcript of Account (Tab 6) and Loan Authorization (Tab 2).
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB01-002.
UPP Tab 1: attach a copy of the complete original credit memorandum and any modifications.
Status: Ready
- What we checked
- Whether the file holds: credit memo
- What we found
- Present: credit memo. Presence only; content not tested in v0. Not checked in v0: Credit Elsewhere test, Personal Resources test.
- Where in the file
- Credit_Memo_Ridgeway.docx
- Why it matters
- UPP Tab 1: attach a copy of the complete original credit memorandum and any modifications. (Analysis under Credit Elsewhere / Personal Resources Test is a separate SOP requirement, not stated in the UPP.)
- Why believe this
- 5 corpus entries name this failure.
- D-086 (deficiencies): Credit memo, authorization and closing documents do not agree; no change memo for post-approval changes (MULTI-SOURCE, 9 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- AE-016 (CREDIT-ANALYSIS-STANDARDS): Repayment ability not adequately supported by cash flow; pre-existing tax lien not addressed; business-failure explanation unsupported
- OC-023 (OCRM-PARRIS-CORPUS): Credit memo lacks SOP-required elements
- OIG 19-22 (OIG-CORPUS): Material origination and closing problems: business valuations, affiliates, equity injection, repayment ability (ORIGINATION/CLOSING)
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1) — rule status VERIFIED
What does this mean?
SBA reads the lender's credit memo on every purchase, not only early defaults.
The rule we checked against
M5-TAB02-002 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1) Rule status: VERIFIED
The rule, as our rulebook reads it: UPP Tab 1: attach a copy of the complete original credit memorandum and any modifications. (Analysis under Credit Elsewhere / Personal Resources Test is a separate SOP requirement, not stated in the UPP.)
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB02-002.
Disbursement dates and amounts reconcile to Form 1149 disbursement history and to the final-disbursement date
Status: Ready
- What we checked
- Whether the file holds: transcript of account (Form 1149)
- What we found
- Present: transcript of account (Form 1149). Presence only; content not tested in v0. Not checked in v0: Disbursement ledger.
- Where in the file
- SBA_1149_Transcript_of_Account.xlsx
- Why it matters
- Disbursement dates and amounts (Tab 5) reconcile to Form 1149 disbursement history and to the final-disbursement date used for the 18-month early-default test.
- Why believe this
- 5 corpus entries name this failure.
- D-091 (deficiencies): Proceeds disbursed inconsistently with the authorization or credit-memo use of funds (MULTI-SOURCE, 18 sources)
- CA-061 (CREDIT-ANALYSIS-STANDARDS): Early-default reviews are held to "the highest degree of scrutiny" (SOP 50 51 3 as quoted in OIG 12-18; older SOP). Defaults within 18 months of final disbursement draw f…
- AE-012 (CREDIT-ANALYSIS-STANDARDS): Equity claimed from improvements made two years before disbursement, no payment source, no proof not borrowed
- OC-017 (OCRM-PARRIS-CORPUS): Working-capital disbursements not monitored or documented (other than normal operating expenses)
- OIG 16-19 (OIG-CORPUS): Lender did not verify eligible use of proceeds; did not assess repayment ability and size (ORIGINATION)
- Rule status
- Form 1149 (SBA NGPC page); early-default definition (ROM 10-19) — rule status PRACTICE
What does this mean?
The disbursements on the settlement sheet must match the loan ledger.
The rule we checked against
M5-TAB05-003 · Form 1149 (SBA NGPC page); early-default definition (ROM 10-19) Rule status: PRACTICE
The rule, as our rulebook reads it: Disbursement dates and amounts (Tab 5) reconcile to Form 1149 disbursement history and to the final-disbursement date used for the 18-month early-default test.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TAB05-003.
Loan was in liquidation status before the purchase request
Status: Ready
- What we checked
- The loan was moved to liquidation status (code 5) on the SBA 1502 report before the purchase request
- What we found
- First liquidation status 2026-04; purchase request 2026-09-15.
- Where in the file
- SBA_1502_Status_History.csv, row 4, column 1; SBA_1502_Status_History.csv, row 4, column 2
- Why it matters
- Why believe this
- 4 corpus entries name this failure.
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- OIG 24-20 (OIG-CORPUS): SBA failed to report charged-off PPP loans; weak oversight of lender communication and collection (PURCHASE/LIQUIDATION)
- PI-020 (PIIA-CORPUS): Liquidation deficiencies (site visits late, disposition and recovery misapplied)
- PR-017 (PURCHASE-REPAIR-DENIAL-CORPUS): Purchase not requested within 180 days after maturity (or after liquidation where applicable)
- Rule status
- UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1 checklist), citing 13 CFR 120.520 — rule status VERIFIED
What does this mean?
SBA wants the loan formally marked as a problem before it will pay.
The rule we checked against
M5-TIME-006 · UPP v5.3 (SBA PDF, footer "v5.3 Effective August 10, 2026"), p.2 (Tab 1 checklist), citing 13 CFR 120.520 Rule status: VERIFIED
The rule, as our rulebook reads it: Before submitting a purchase request the lender must transfer the loan to liquidation status. The borrower must be in payment default on the Note for more than 60 calendar days unless SBA agreed otherwise in writing (13 CFR 120.520); the UPP asks the lender to check that the default exceeds 60 days OR that SBA approval is attached.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M5-TIME-006.
Formal liquidation plan prepared covering site-visit findings, workout feasibility, recoverable collateral val
Status: Ready
- What we checked
- Whether the file holds: liquidation plan
- What we found
- Present: liquidation plan. Presence only; content not tested in v0. Not checked in v0: SBA Form 1979 (CLP).
- Where in the file
- Liquidation_Plan.docx
- Why it matters
- Formal liquidation plan prepared covering site-visit findings, workout feasibility, recoverable collateral value, liquidation methods, recovery from obligors, expense/recovery allocation, and other loans with same borrower. Submitted to SBA only for CLP loans (SBA Form 1979).
- Why believe this
- 5 corpus entries name this failure.
- D-113 (deficiencies): Post-default site visit not made, or made late (60 days after payment default, 15 days after a non-payment default) (MULTI-SOURCE, 6 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- PI-020 (PIIA-CORPUS): Liquidation deficiencies (site visits late, disposition and recovery misapplied)
- PR-064 (PURCHASE-REPAIR-DENIAL-CORPUS): Site visit not done or late
- TW-082 (TRAINING-CORPUS): Collateral value haircuts misapplied
- Rule status
- Starfield 2023-11; SBA liquidation page; 13 CFR 120.540(b) — rule status VERIFIED
What does this mean?
SBA expects a written plan for collecting on a defaulted loan.
The rule we checked against
M6-PLAN-001 · Starfield 2023-11; SBA liquidation page; 13 CFR 120.540(b) Rule status: VERIFIED
The rule, as our rulebook reads it: Formal liquidation plan prepared covering site-visit findings, workout feasibility, recoverable collateral value, liquidation methods, recovery from obligors, expense/recovery allocation, and other loans with same borrower. Submitted to SBA only for CLP loans (SBA Form 1979).
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M6-PLAN-001.
Payment default reporting: monthly SBA 1502 reports
Status: Ready
- What we checked
- Whether the file holds: SBA 1502 status history
- What we found
- Present: SBA 1502 status history. Presence only; content not tested in v0.
- Where in the file
- SBA_1502_Status_History.csv
- Why it matters
- Payment default reporting: monthly SBA 1502 reports; loan must be in liquidation status (code 5) before purchase request.
- Why believe this
- 5 corpus entries name this failure.
- D-109 (deficiencies): Payment due dates inconsistent with the 1502 reporting period; wrong accrual method on sold loans (MULTI-SOURCE, 3 sources)
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- OIG 24-20 (OIG-CORPUS): SBA failed to report charged-off PPP loans; weak oversight of lender communication and collection (PURCHASE/LIQUIDATION)
- PI-020 (PIIA-CORPUS): Liquidation deficiencies (site visits late, disposition and recovery misapplied)
- PR-017 (PURCHASE-REPAIR-DENIAL-CORPUS): Purchase not requested within 180 days after maturity (or after liquidation where applicable)
- Rule status
- SBA liquidation page; Starfield 2026 — rule status VERIFIED
What does this mean?
The lender reports the loan's status to SBA every month on Form 1502.
The rule we checked against
M6-SVC-006 · SBA liquidation page; Starfield 2026 Rule status: VERIFIED
The rule, as our rulebook reads it: Payment default reporting: monthly SBA 1502 reports; loan must be in liquidation status (code 5) before purchase request.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M6-SVC-006.
Report paid-in-full as code '6' on monthly SBA 1502
Status: Ready
- What we checked
- Whether the file holds: SBA 1502 status history
- What we found
- Present: SBA 1502 status history. Presence only; content not tested in v0.
- Where in the file
- SBA_1502_Status_History.csv
- Why it matters
- Report paid-in-full as code '6' on monthly SBA 1502; liquidation status is code '5'; notify SBA when requesting guaranty cancellation.
- Why believe this
- 5 corpus entries name this failure.
- D-143 (deficiencies): Form 1502 reporting late or inaccurate (MULTI-SOURCE, 4 sources)
- OIG 24-20 (OIG-CORPUS): SBA failed to report charged-off PPP loans; weak oversight of lender communication and collection (PURCHASE/LIQUIDATION)
- PR-066 (PURCHASE-REPAIR-DENIAL-CORPUS): Recoveries applied to lender's own loan when guaranty loan had priority
- CA-010 (CREDIT-ANALYSIS-STANDARDS): Business cash flow of the applicant is the primary source of repayment, not liquidation of collateral.
- AE-003 (CREDIT-ANALYSIS-STANDARDS): Unsupported add-backs (personal income, guaranteed payments)
- Rule status
- SBA liquidation process page — rule status VERIFIED
What does this mean?
When a loan is paid off, the lender reports it with a code on the monthly 1502.
The rule we checked against
M6-WRAP-005 · SBA liquidation process page Rule status: VERIFIED
The rule, as our rulebook reads it: Report paid-in-full as code '6' on monthly SBA 1502; liquidation status is code '5'; notify SBA when requesting guaranty cancellation.
Not sure what to do with this finding? Call us at (000) 000-0000 and mention rule M6-WRAP-005.