SBA and SPARK Update - Lender Responsibilities Under the Criminal Justice Rule

On April 30, 2024, SBA published the “Criminal Justice Reviews for the SBA Business Loan Programs, Disaster Loan Programs, and Surety Bond Guaranty Program” Final Rule (Rule), 89 FR 34094, which is effective today, May 30, 2024.

On Wednesday, May 29, 2024, the Office of Financial Assistance sent out a notification that includes the following information:

"Until Applicants can apply using updated program application forms, if the Applicant answers “yes” on the question regarding criminal history (SBA Form 1919, page 2, question 4, or SBA Form 1244, page 4, question 4), 7(a) Lenders and CDCs must determine whether the Applicant is ineligible for a 7(a) or 504 loan based on the Criminal Justice Rule’s requirements in accordance with the new question as stated above, and the SBA Lender must document the results in the loan file."

As a result of this change, a "Yes" response to question 4 will no longer result in an "Ineligible" status but will instead result in a "Review" status. SPARK's personal history, business history, and entity owner history language will remain the same until the SBA formally releases a new version of SBA Form 1919.

SPARK will be updated tonight (Thursday, May 30) to comply with this change. No action is required for SPARK customers, but if you have any questions, please direct them to customersuccess@lendwithspark.com.

The full SBA announcement can be referenced here.

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