SBA Alters Process in Determining if Business has 'Associate of Poor Character,' Effective Immediately
Pursuant to SBA Procedural Notice 5000-1401 issued December 14, 2016, there is a new procedure to process SBA Form 912 (Statement of Personal History) issues effective today.
In determining whether a business includes an "Associate of Poor Character", the SBA Office of Personnel Security (OPS) will now be responsible for processing fingerprint checks for all individuals where the SBA Form 912 is required under the new analysis. Effective immediately, the Office of the Inspector General will no longer process these requests.
For SBA lenders, the number of applications which will be required to be submitted for clearance should be reduced to more manageable levels, as a more streamlined approach to the review of associates will apply. As was the case previously, if an individual, in completing the Form 1919 answers "yes" to questions 2 and 3, a character determination will be required. However, after the subject individual completes the detailed explanation of the offenses as was previously required, for most misdemeanors (excluding crimes against a child or misdemeanors within six months of application), the lender must retain the supporting documentation in its file and may proceed to closing without any further 912 review.
If there are any felonies or non-excluded misdemeanors, then a fingerprint card, the Form 912, and the individual's written explanation must be provided to OPS which will conduct the background check (OPS will also submit to the FBI or its electronic fingerprint submission service for further investigation). Remember Fingerprint Card FD 258 must be used. The loan may not be disbursed until the formal clearance is provided by the SBA in writing. For felony convictions, this process must be submitted within 90 days prior to submission of loan application to the SBA.
Information is contained in the notice regarding where Delegated and Non-Delegated Lenders should submit their packages for clearance. As a reminder, an individual may not reduce their ownership to avoid completing the Form 912. Please see SBA Procedural Notice 5000-1401 for complete details.
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We will review SBA Procedural Notice 5000-1401 in more detail at our seminar scheduled for January 5, 2017 covering the new SOP Updates on 50 10 5(I). If you are local and would like to attend, go to: http://www.lerchearly.com/news_events/1519-new-sop-updates-i-lender-development-company-loan-programs.