SBA SOP 50 10 8.1, B.Ch3.G — Post-Closing Requirements for Revolving Loans

SOP 50 10 8.1 B.Ch3.G

Effective 2026-10-01 · publisher's stamp for this provision

G. Post-Closing Requirements for Revolving Loans Beginning no later than the end of the second year (24 months from approval): 1. For revolving loans, Lenders must conduct an annual review of business financials to determine whether the line may continue to revolve for an additional year or whether the facility should be termed out. This review must include an analysis of the previous year-end financial performance and the most recent interim statement available. This review may coincide with the Lender’s annual renewal process for the loan. The Lender must use a combination of factors for the decision consistent with its similarly-sized, non-SBA guaranteed commercial lines of credit, or, if the Lender does not make similarly-sized non-guaranteed loans, consistent with prudent lending standards. The Lender’s analysis must assume full use of the revolving line of credit and must include at a minimum; a. Cash flow analysis to determine the adequacy, duration, and dependability of cash flow; b. Owner/Guarantor analysis, except Supplemental Guarantors; c. Documentation that the Borrower: i. Can support a debt service coverage ratio of at least 1.10:1. Debt service coverage calculation must be based on the full debt service of the business, including the debt service for the 7(a) MARC loan, on a fully amortizing basis using the maximum loan amount and maturity approved; ii. Is current at the time of the review (meaning total interest due to date has been paid); and iii. Maintains sufficient collateral as described in Appendix 19, Para. B.4. d. If each of the above requirements are met, the line may continue to revolve. e. If the above requirements are not met upon first annual review, the Lender may justify the decision to maintain the revolving portion of the line, and must retain the justification in the credit file. At the next scheduled review, if the above requirements are not met the line must be converted to a fully amortizing term loan. f. The Lender may require the line to convert to a fully amortizing term loan at any point, if the Lender deems it necessary, based on prudent lending criteria. g. Once the loan has been converted to a term loan, the Lender may not make further disbursements on the line. h. In the event that the Lender discovers that proceeds were used to acquire fixed assets under the revolving portion of the loan, the Lender has the ability to convert the portion of the loan to a fully amortizing term loan (which may be a 7(a) term loan) in order to preserve the availability of the revolving line of credit for eligible working capital purposes. i. Disbursements: See Disbursements in this Chapter above.

Source: SBA SOP 50 10 8.1, B.Ch3.G — Post-Closing Requirements for Revolving Loans · source URL · snapshot 0fb0c4692cf52938