SBA Procedural Notice Control Number 5000-864101: CA SBLC Requests for Increases in 7(a) Loan Size

Summary

SBA Procedural Notice, Control No. 5000-864101, effective January 15, 2025, to SBA employees and 7(a) Community Advantage Small Business Lending Companies (CA SBLCs), on CA SBLC requests for increases in 7(a) loan size. It advises that SBA is expanding the 7(a) loan ceiling for approved CA SBLCs. It also advises that SBA is starting a process for qualifying CA SBLCs to apply to SBA for an expansion.

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SBA Procedural Notice

TO: All SBA Employees and 7(a) Community CONTROL NO.: 5000-864101
Advantage Small Business Lending Companies
EFFECTIVE: January 15, 2025
SUBJECT: CA SBLC requests for increases in 7(a)
loan size

The purpose of this Notice is to advise SBA Employees and 7(a) Community Advantage Small
Business Lending Companies (CA SBLCs) that SBA is 1) expanding the 7(a) loan ceiling for approved
CA SBLCs, and 2) initiating a process to enable qualifying Community Advantage Small Business
Lending Companies (CA SBLCs) to apply to SBA for expansion of their 7(a) loan ceiling.

On April 12, 2023, SBA published a final rule at 88 FR 21890 on Small Business Lending
Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan
Authorization. Through that rule, SBA created a new type of SBLC called a CA SBLC and
provided for a grandfathering of CA Pilot Lenders that were participating in the CA Pilot
Program (in accordance with 13 C.F.R. § 120.420(e)) to be licensed as CA SBLCs.

SBA Information Notice 5000-846918, effective May 1, 2023, states that SBA would be holding
all CA SBLCs to the same requirements that had existed for the CA Pilot Program, as outlined in
the Community Advantage Participant Guide (Version 7, effective May 31, 2022), which included
a $350,000 loan limit.

SBA announced on December 17, 2024 (SBA Information Notice 5000-860909) that effective on
or after January 1, 2025, SBA would increase the maximum aggregate loan amount available for
all Active CA SBLCs with Satisfactory SBA Performance that are in Good Standing up to
$500,000 (gross).

Expansion of 7(a) loan ceilings for CA SBLCs:

Loan ceilings above $500,000 up to $2,000,000:

SBA is increasing the CA SBLC loan amount maximum from $500,000 to $1,000,000 (gross)
for any type of 7(a) loan, and up to $2,000,000 for climate-related projects.

PAGE 1 of 3 EXPIRES: 1/1/26
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58

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Climate-related projects include renewable energy projects (e.g., adding solar, wind, geothermal
power, etc.) and those projects that reduce energy consumption (e.g. retrofits), and building
design, construction, and retrofit for highly efficient and cost-saving green buildings. SBA in its
sole discretion will determine whether it agrees that a project qualifies as a climate-related
project. Such projects could include those with 20% or more spending dedicated to climate-
related initiatives. Additionally, SBA will presume climate-related requirements are met if the
loan supports a project for which the subject business obtains a certification from other Federal
climate programs, such as the using Environmental Protection Agency’s (EPA’s) EnergyStar
NextGen, Department of Energy’s (DOE’s) Zero Energy Ready Home Program or Leadership in
Energy and Environmental Design certification; the business qualifies for funding through
EPA’s Greenhouse Gas Reduction Fund; or the business spending qualifies for federal climate
tax incentives.

As further described below, CA SBLCs ,must request and receive approval from SBA to make
7(a) CA SBLC loans up to these increased loan amounts, and only up to the amount approved by
SBA. Further, only those CA SBLCs that have been approved to make loans up to $1,000,000
may apply to make climate-related loans up to $2,000,000. Also, CA SBLCs with delegated
lending authority may not use their delegated authority to process loans in excess of $500,000.

Application process for increased loan ceiling requests:

CA SBLCs may apply to SBA and request the authority to make 7(a) loans up to $1,000,000 and
in cases of climate projects for up to $2,000,000. Only those CA SBLCs that have been
confirmed by OCRM to make loans up to $500,000 are eligible to apply. Send applications to
CAloans@sba.gov.

The CA SBLC’s application must include:

1. The maximum dollar amount of individual 7(a) loans that the CA SBLC is seeking to
make.

2. Copy of Board Resolution authorizing the CA SBLC’s proposed new 7(a) lending dollar
range.

3. Board-approved Business Plan addressing the CA SBLC’s experience in making and
servicing larger loans and its proposed operations for lending in this new dollar range.
The business plan must include the following information:

a. The CA SBLC must provide a narrative addressing the underserved or unmet
demand for financial services in the new loan size. The narrative should address
how the applicant’s proposed increase in their maximum 7(a) loan lending
authority will contribute to local economic development, job creation, and
improved living standards and what support is available from local communities,
businesses, and governments indicating a need for this increased lending
authority.

PAGE 2 of 3 EXPIRES: 1/1/26
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58

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b. If the CA SBLC is seeking authority to make 7(a) loans of up $2,000,000 for
climate-related projects, the business plan must include an explanation of the
types of projects that the lender is seeking to support.

4. Most recent quarterly or annual financial statement if not already supplied to SBA for
reporting requirements pursuant to 13 CFR §120.464.

5. Capital Plan: The CA SBLC’s board is required to determine the CA SBLC’s capital
adequacy goals – that is, the total amount of capital needed to assure the CA SBLC’s
continued financial viability, the sufficiency of capital to make larger loans and to
provide for any necessary growth. The Board of Directors must establish, adopt, and
maintain a formal written Capital Plan pursuant to 13 CFR §120.462(c). The plan must
include any interim capital targets that are necessary to achieve the CA SBLC’s capital
adequacy goals. Lender must maintain minimum capital amount as published in Loan
Program Requirements. The Capital Plan must address the following: (i) management
capability; (ii) quality of operating policies, procedures, and internal controls; iii) quality
and quantity of earnings; iv) asset quality and the adequacy of the allowance for loan
losses within the loan portfolio; v) sufficiency of liquidity; and vi) any other risk-oriented
activities or conditions that warrant additional capital (e.g., portfolio growth rate).

6. Copy of your organization’s updated loan policies (loan origination and servicing policies
and internal control policy).

7. Copy of Lender’s Loan Loss Methodology - pursuant to 13 CFR §120.463(e)(1) each CA
SBLC must maintain an allowance for losses on loans and other assets that is sufficient to
absorb all probable and estimated losses that may reasonably be expected based on the
lender’s historical performance and reasonably-anticipated events. Each CA SBLC must
maintain documentation of its loan loss allowance calculations and analysis in sufficient
detail to permit the SBA to understand the assumptions used and the application of those
assumptions to the assets of the CA SBLC.

Questions:

Questions concerning this Notice may be directed to Nermeen Ghniem, Senior Financial Analyst,
Office of Credit Risk Management at CAloans@sba.gov.

Susan Streich
Director
Office of Credit Risk Management

PAGE 3 of 3 EXPIRES: 1/1/26
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58

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