SBA SOP 50 10 8.1, C.Ch2.C.2 — Responsibility for Closing the 504 Loan and Debenture

SOP 50 10 8.1 C.Ch2.C.2

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

2. Responsibility for Closing the 504 Loan and Debenture a. The CDC is responsible for the 504 loan closing, including compliance with all SBA Loan Program Requirements. Each CDC has its own division of labor and dictates the CDC Counsel’s role. Although SBA counsel is available for advice and assistance, the CDC and its attorney are ultimately responsible for the 504 Loan closing. (13 CFR §§ 120.960 and 120.10) b. The debenture closing is the joint responsibility of the CDC and SBA. CDC must prepare the documents necessary for closing the debenture. SBA counsel reviews the loan closing package for legal sufficiency and opines whether SBA may guarantee the debenture. (13 CFR § 120.960) c. All CDC Counsel (including Designated Attorneys and those without Designated status) who submit 504 Loan closing packages to SBA must use the form Opinion of CDC Counsel. The Opinion of CDC Counsel requires the CDC Counsel to acknowledge that SBA will rely upon the Opinion in guaranteeing the Debenture. Additionally, the Opinion requires the CDC Counsel to certify that the CDC Counsel is a licensed, active member, in good standing, of the Bar of the applicable state. If closing deficiencies that cause a loss on the 504 loan occur, SBA may pursue a claim against the CDC Counsel for the closing deficiencies. SBA will also expect the CDC to timely pursue any claims the CDC may have against the CDC Counsel as a result of closing deficiencies. Additionally, all CDC Counsel are considered to be Agents who conduct business with SBA under 13 CFR § 103.1(a). The regulation at 13 CFR § 103.4 provides that SBA may suspend or revoke an Agent’s privilege to conduct business with SBA for good cause, including violations of ethical guidelines which govern the profession or business of the Agent or which are published at any time by SBA. Finally, as set forth in Paragraph C.5.h., Withdrawal of Designated Attorney Status below, good cause for withdrawal of Designated Attorney status includes, among other things, submission of unsatisfactory 504 closing packages. d. Priority CDCs may not use in-house counsel as its designated attorney. Because the opinion of counsel is only one component of the loan closing, a CDC may not use its in-house counsel to close a 504 loan and obtain an opinion of counsel from an outside designated attorney. The very limited circumstances under which one attorney performs the closing and another attorney provides the opinion of counsel are outlined in the boilerplate opinion of counsel and involve a project in one state and the CDC counsel in another.

Source: SBA SOP 50 10 8.1, C.Ch2.C.2 — Responsibility for Closing the 504 Loan and Debenture · source URL · snapshot 0fb0c4692cf52938