SBA SOP 50 10 8.1, B.Ch6.D.3 — Closing Documentation:

SOP 50 10 8.1 B.Ch6.D.3

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

3. Closing Documentation: a. For all 7(a) loans, Lender must disburse the loan proceeds in accordance with the SBA Terms and Conditions. b. All Lenders must document each disbursement on an SBA-guaranteed loan. Except under SBA Express, Export Express, and 7(a) Small Loans, Lender and Borrower must use and complete and sign SBA Form 1050 or Lender’s equivalent form at the time of first disbursement. If there are subsequent disbursements, Lender must document each disbursement and attach the documentation to the original SBA Form 1050. The documentation must contain sufficient detail for SBA to determine: i. The recipient of each disbursement; ii. The date and amount of each disbursement; and iii. The purpose of each disbursement. c. The Lender must obtain evidence to support disbursements, such as cancelled checks or paid receipts, to ensure that the Borrower used loan proceeds for purposes stated in the SBA Terms and Conditions. If the SBA Terms and Conditions identifies working capital as a use of proceeds and those proceeds will be used to pay normal operating expenses (e.g., payroll, utilities, etc.), then the working capital disbursement does not need to be documented. d. The following documentation is acceptable to verify disbursement in accordance with the SBA Terms and Conditions: i. Joint payee checks; ii. Copies of receipts, invoices or other supporting documentation marked paid by the seller or vendor; or iii. Evidence of an electronic funds transfer to a vendor along with a copy of the invoice. e. The Lender must retain in its loan file the signed SBA Form 1050 as well as all supporting documents. f. Documentation of Equity Injection: i. With the exception of SBA Express and Export Express loans, Lenders must verify the SBA-required equity injection prior to disbursing any loan proceeds and must maintain evidence of such verification in their loan files. Lenders are expected to use reasonable and prudent efforts to verify that equity is injected and used as intended, and failure to do so may warrant a repair or partial/full denial. Lenders must submit this documentation with each purchase request on a loan for which SBA requires an equity injection. Verifying a cash injection requires the following documentation: a) A copy of a check or wire transfer along with evidence that the check or wire was processed showing the funds were moved into the Borrower’s account or escrow; b) A copy of the most recent statement(s) (covering at least 30 days) from the account where the funds are being withdrawn (showing that funds were available); and c) A statement from the Borrower’s account documenting the funds were deposited or a copy of a settlement statement or HUD-1 showing the use of the cash. ii. A promissory note, “gift letter,” or financial statement is not sufficient evidence of cash injection without corroborating evidence consistent with Subparagraph f. i. immediately above. iii. If the equity injection will come from any form of borrowed funds, such as a HELOC or seller financing in excess of the minimum Borrower injection requirements outlined above, Lender must address the proposed repayment terms as well as any Standby or Subordination terms that will be in place. iv. For SBA Express and Export Express loans, if a Lender requires an equity injection and, as part of its standard processes for similarly-sized, non-SBA guaranteed commercial loans verifies the equity injection, it must do so for its SBA Express and Export Express loans.

Source: SBA SOP 50 10 8.1, B.Ch6.D.3 — Closing Documentation: · source URL · snapshot 0fb0c4692cf52938