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COLEMAN: Small Business Lender News of the Day for Tuesday, August 19, 2025

August 19, 2025

Michigan Business Network

SBA Hot Topic Tuesday: SBA Expands Reviews to 504 Third-Party Lenders

The SBA has issued a procedural adjustment with meaningful implications for Third-Party Lenders in the 504 program. In NADCO Technical Issues Memo 30-25 (August 5, 2025), SBA confirmed that TPL contacts will now be copied on initial notices of Payment Integrity Information Act (PIIA) reviews.

A lender who funds the first lien position of a SBA 504 transaction is called the Third-Party Lender.

Expanded Notification Protocol

Historically, the Certified Development Company (CDC) served as SBA’s sole point of contact for PIIA reviews, with the expectation that CDCs notify borrowers and TPLs when a loan was selected. Under the new process, SBA will include the TPL on its original Sacramento Quality Assurance notification email.

While the CDC retains responsibility for managing the review process and all required follow-up, this expanded notification framework ensures that lenders are directly and contemporaneously informed when their credits are pulled for audit.

The Compliance Context

The change is rooted in SBA’s statutory obligation under the Payment Integrity Information Act of 2019 and related OMB guidance. Federal agencies must conduct annual reviews of programs that present exposure to improper payments. For SBA, this mandate translates into random loan-level audits to validate that approvals conform with program requirements.

In effect, PIIA reviews serve as a regulatory backstop—testing whether underwriting, eligibility determinations, and documentation stand up to program standards. SBA has announced that for FY 2026, reviews will draw from all 504 approvals between April 1, 2025, and March 31, 2026.

Implications for Third-Party Lenders

By bringing TPLs directly into the notification stream, SBA is signaling a heightened expectation that lenders maintain continuous visibility into their SBA exposures. This procedural refinement underscores:

Transparency – TPLs no longer rely exclusively on CDCs for review notifications.
Accountability – SBA views TPLs as active compliance stakeholders, not peripheral participants.
Readiness – Lenders must assume their files are subject to audit at any time within the applicable fiscal year window.

SOP 50 10 8 Alignment

This shift dovetails with the obligations already detailed in SOP 50 10 8. Third-Party Lenders are expected to:

Apply prudent credit standards to their participation, ensuring structural compliance with SBA regulations.
Coordinate effectively with CDCs to deliver a consistent and fully supported loan package.
Maintain file integrity and oversight post-closing to safeguard collateral and repayment sources.

The procedural update does not alter these obligations but reinforces SBA’s expectation that lenders demonstrate full alignment with the program’s statutory and regulatory framework.

View NADCO Memo 30-25 here.

Leverage Co-Pilot/ChatGPT to Analyze SBA Collateral and Write Professional Credit Memo Narratives — Webinar 8/20 & 9/4

SBA 7(a) collateral analysis and narrative preparation remain time-consuming, error-prone, and inconsistent across underwriting teams. With the new SBA SOP 50 10 8, lenders face expanded requirements for collateral valuation, lien documentation, and narrative support—all of which must be clearly presented in the credit memo. A poorly documented collateral section can lead to repairs, denials of guaranty, or costly buybacks.

Join our webinar to learn how to harness ChatGPT to perform SBA collateral analysis and craft compliant, thorough collateral narratives. Building on lessons from our Top 30 SBA Loan Exceptions webinar, you’ll learn how AI tools can help you proactively avoid the critical underwriting missteps that frequently invalidate SBA guarantees.

Leverage ChatGPT & Microsoft Co-Pilot to Craft SBA 7(a) Credit Memos — Onsite Workshop in Ontario, CA on 9/25

Bob Coleman will lead a full-day workshop teaching how to use AI tools like ChatGPT and Microsoft Co-Pilot to streamline SBA 7(a) credit memo preparation. Attendees will receive hands-on training, work through real loan examples, and get ready-to-use templates to improve their underwriting process.

The event takes place on September 25 from 9AM to 4PM PT at AmPac Business Capital near Ontario International Airport, with a networking dinner the evening before. It is designed for SBA underwriters, credit analysts, lending managers, and bank executives looking to boost efficiency and accuracy. Registration is $795 per attendee, and seats are limited.

SBA Secondary Market Summit — December 4, 2025

Coleman’s SBA Secondary Market Summit is back for 2025! For our 18th year, we’re excited to partner with the National Rural Lenders Roundtable (NRLR) to bring you two premier events under one roof in Washington, DC. Bob Judge will bring his decades of industry knowledge and expert insight to give us a glimpse of what to expect in 2026. Bob Coleman will moderate and put together the only program that brings together the Big Four of the SBA secondary market: Brokers, Investors, Sellers and SBA.

Early registration for the Summit is now open with a special early bird offer — one seat for just $995 if purchased by August 15. Don’t miss this opportunity to save!