If you currently have any type of SBA Loan in your pipeline, check CAIVRS to avoid an 11th hour disaster!

CAIVRS (Credit Alert Interactive Voice Response System) is a database that shows whether a borrower is currently in default or foreclosure on any federal-government-backed debt. CAIVRS has been around for a while. Recently, it has been causing some major problems for borrowers who, for one reason or another, have EIDL loans showing up as delinquent on CAIVRS! A delinquent EIDL loan will prevent the bank or the CDC from submitting any new SBA loans on ETRAN for the borrower.

 loans are increasingly showing up as delinquent on CAIVRS for a variety of reasons. It could be a true delinquency resulting from the borrower not making scheduled payments on the EIDL loan. It could also be from the payments being improperly allocated to principal and interest. It could be from reporting errors. It could be from the borrower starting the repayment process in arrears due to misplaced paperwork. It could be that the borrower sold a business and did not properly terminate the EIDL loan. For whatever reason the EIDL when into delinquent status, it will need to be brought “current” and flagged as “return to regular service” on CAIVRS before the ETRAN hold drops off.

The problem is that borrowers, lenders, and CDCs are not finding out that the borrower has a “delinquent” EIDL loan on CAIVRS until it is too late! Once it is determined that a borrower is delinquent in CAIVRS, the EIDL loan can be put back into “current” status. The HUGE problem is that it takes many weeks for the “return to regular service” flag to kick in. This can become a BIG problem when you’ve got just a few weeks left to close a deal! So long as this flag is absent, neither the bank nor the CDC can submit any new SBA loan applications for that borrower on ETRAN! The number of these incidents is increasing, and, hopefully, the SBA will address the issue quickly in the near future!

Why should you care about this? If you have—for example—a SBA 504 loan with a 60-day escrow, the lender or CDC would’ve had to pull the CAIVRS report right at the opening of escrow to maybe have a chance of closing escrow on time! If the CAIVRS report is not pulled earlier in the application process, the borrower will likely need to ask the seller for an extension to the close of escrow. If the seller refuses to extend the closing, the borrower would need to find some type of bridge financing to close escrow and wait until the CAIVRS system is updated!

What should you be doing to prevent from being caught up in this mess? Either have your SBA team or the CDC pull the CAIVRS report as quickly as possible! If your borrower does show up as delinquent, they should call CIAVRS at 501-296-3041 ASAP to get the resolution process started! Your borrower will need to have the EIDL loan number before they get on the phone with CAIVRS.

If you want to work with a CDC BDO that will help get your SBA deals to the finish line, call me at 310-210-4571. I also have a Business Banker Development Program that will give you the skills you need to double your production and double your compensation. You can learn about the banker development program at www.bizpetrol.com/business-bankers.

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