SBA loan closing compliance review that ties every Authorization term to a signed document before funds move
No disbursement with an unexplained gap between approval and closing.
See one case, screen by screen ↓It is the check, before disbursement, that every term in the SBA Loan Authorization and the credit memo is met by a signed closing document — amount, rate, use of proceeds, liens, owners and guaranties, equity injection and conditions. SBA Loan Closing Review has six agents read both sides, tie each term to its document and hold funding on every loose end until a person resolves it.
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An SBA 7(a) loan’s terms are written down three times: in the credit memo, in the SBA Loan Authorization, and in the documents the borrower, guarantors and seller sign at closing. Between the three, terms drift. An owner’s percentage changes in the operating agreement, a seller note picks up payments, a packager’s fee appears on the settlement statement, a UCC-1 is filed under the wrong name.
Today the check is a closer reading the Authorization against a 40-document package by hand, in the few days before funding. What slips through stays quiet until the loan defaults and SBA reads the file — and an undocumented equity injection, proceeds used outside the Authorization or a lien that was never perfected become a repair or a denial of the guaranty.
Estimated split for one SBA 7(a) acquisition closing, by hand and with the solution.
Six specialist agents compare every closing term with the approval and trace every dollar; the closer resolves, the manager signs.
Bell Comfort Holdings LLC signed a $2,148,400 SBA 7(a) loan on Friday to buy Copperline Heating & Air. Funding is set for Thursday. Here is the week, screen by screen, in the working solution.
All 38 signed documents came back from Feeney & Shaw on Friday at 17:05. Danielle opens the closing: the SBA Loan Authorization of 24 Sep on the left, 214 terms in all, and the signed closing package on the right — note, asset purchase agreement, settlement sheet, UCC-1, guaranties, seller note, standby agreement. Funding is Thursday, three days out.
“Anything that cannot be tied hangs loose — and funding holds until it is fixed.”
Danielle presses Match the package. The approval reader lists 214 terms and conditions, the closing document reader reads the 38 documents page by page, and the terms matcher ties each term to its document. Green lines tie; red lines run to a document that says something else.
“208 of 214 terms tied · 6 loose · funding held.”
The Authorization requires a collateral assignment of $500,000 of life insurance on Marcus Bell, acknowledged by the insurer, before disbursement. Its line stretches across and ends in “Not in closing package”. Lakeshore Mutual Life issued policy LM-88214907 on 30 Sep — but no assignment was signed, and none of the 38 documents mentions it.
Who fixes it: Marcus Bell · Lakeshore Mutual Life. What clears it: the collateral assignment, acknowledged by the insurer.
Each of the six mismatches carries the approved wording and the signed wording, with the page. The Authorization p. 3 puts the seller note on “full standby for the life of the SBA loan”; seller note §2 says “interest only, commencing on the 25th monthly anniversary”. Each one links to the documents and the SOP rule behind it.
Total project cost is $2,388,400, so a complete change of ownership needs $238,840. The closing claims $240,000 — $130,000 of cash plus the $110,000 seller note. Marcus Bell’s $95,000 is seasoned 90 days and wired to escrow on 8 Oct. Leonard Whitaker’s $35,000 gift has a letter and a deposit, but nothing shows it leaving his account, and the seller note is not on full standby.
“Only $95,000 is verified — 3.98%.” A gift letter alone is not proof.
The Authorization names four uses of proceeds. On the settlement statement, working capital of $175,000 becomes $162,500 to the borrower and $12,500 to Larkmoor Loan Advisors as a “loan packaging fee”. Ridgeline Business Brokers has a Form 159; Larkmoor has none, and its fee is over $2,500 with no breakdown of work.
The UCC-1 filed on 6 Oct names “Bell Comfort Holding LLC”; a search of the Ohio Secretary of State under the registered name, Bell Comfort Holdings LLC, returns 0 filings. Credit approved Marcus Bell at 60% and Andrea Bell at 40%; the operating agreement signed on 2 Oct gives Marcus 55%, Andrea 25% and Kyle Bell 20% — with no guaranty, no Form 1919 and no CAIVRS check.
“A filing that the filing office’s standard search does not find under the debtor’s correct name is seriously misleading (UCC §9-506).”
The checklist holds the six exceptions, each with its fix owner: Mark Feeney for an amended seller note and a new UCC-1, the Bells for the donor’s statement, Kyle Bell for his guaranty package, Larkmoor for its Form 159, Marcus Bell and Lakeshore Mutual for the assignment. 55 of 61 conditions are met. Danielle sends the six requests the checklist writer drafted, copied to Ray Lindqvist and Priya Raman.
“Funding is held. The checklist cannot be signed until each is cleared by its document.”
Six new documents come in on 13 and 14 Oct, 44 in the package now. The agents re-check each one against the approval: 214 of 214 terms match and 61 of 61 conditions are met. Danielle submits the checklist with her password and the meaning of her signature: “Reviewed — every term ties to the approval.”
“Your signature, the time and the comparison are written to the audit trail and cannot be changed.”
Priya Raman approves Kyle Bell as a 20% owner and guarantor, with debt service coverage unchanged at 1.42×. Ray Lindqvist signs the closing checklist, and the loan is cleared to fund. The release instruction goes to Feeney & Shaw for Thursday at 10:00 — $2,148,400 from the loan with the buyers’ $130,000.
The same closing, seen by the four people who carry it — what their week looked like, and what it looks like now.
Six specialist agents compare every closing term with the approval and trace every dollar; the closer resolves, the manager signs.
Reads the credit memo and the SBA Authorization and lists every term and condition the closing must meet — amount, rate, guaranty, each use of proceeds and payee, each lien, each owner and guaranty, the equity injection and its sources — keeping the page for each.
Reads every signed closing document — note, guaranties, liens, purchase agreement, seller note, standby, operating agreement, settlement statement — and extracts the terms each sets, with the clause and page.
Compares each term across the credit memo, the Authorization and the signed documents — meaning, not just words — and raises every difference in an amount, party, percentage, payee, lien, name or payment schedule.
Works out total project cost and the required injection, then follows every dollar: seasoning, transfers, the donor’s account for gifts, wires into escrow. Tests any seller note against the SOP in force.
Ties each line of the settlement statement to a use and payee the Authorization names, and checks for a Form 159 from every paid agent.
Builds the closing checklist, holds funding on every open exception, drafts each fix request and re-checks fixes as they arrive.
Resolves each mismatch; credit officer approves changes; manager signs. The agents propose; a named person decides.
The closer can ask about a closing in plain words — or tell it what to send. Every answer cites the document it rests on.
Where is the life insurance assignment?
It is not in the closing package. The Authorization requires a collateral assignment of $500,000 of life insurance on Marcus Bell, acknowledged by the insurer, before disbursement. Lakeshore Mutual Life issued policy LM-88214907 on 30 Sep, but none of the 38 signed documents assigns it. Funding holds until Marcus signs the assignment and the insurer acknowledges it.
Can the seller note count toward the equity injection?
Not as signed. SOP 50 10 8 counts a seller note only on full standby for the life of the loan. Form 155 says that, but the note itself starts interest-only payments in month 25 — the old 24-month rule. Without the $110,000 note, the buyers inject $130,000: 5.4% of $2,388,400, against 10% required.
What changed in the ownership since approval?
Priya approved Marcus Bell 60% and Andrea Bell 40%, and the Authorization says the same. The operating agreement signed on 2 Oct gives Marcus 55%, Andrea 25% and Kyle Bell 20%. At 20% Kyle must sign an unlimited guaranty, a Form 1919 and pass CAIVRS — none is in the file — and Priya must approve the change before funding.
What happens if we fund with these open?
If the loan defaults within 18 months of disbursement, an undocumented injection can lead to a full denial of the guaranty; a lien that a search cannot find can leave SBA unsecured, a repair; and $12,500 paid outside the Authorization is unauthorized use of proceeds. Funding stays held until each one clears.
13 screens from the working solution, on its sample data. Pick one to see it large.
The rules every closing is compared against are settings. Changes are versioned and on the audit trail.
| Setting | Default | Choose from |
|---|---|---|
| SOP version | By approval date (SOP 50 10 8 from 1 Jun 2025) | By approval date · SOP 50 10 8 for every loan |
| Equity injection, change of ownership | 10% of total project cost | Set up or down from 10%, whatever the source of funds |
| Seller note as injection | Full standby for the life of the loan, up to half the injection | That rule · Never counts |
| Seasoning of injected cash | 60 days of statements | 30 · 60 · 90 days of statements |
| Owners who must guarantee | 20% or more | 20% or more · 10% or more · Every owner |
| Search and good-standing freshness | 30 days before funding | 15 · 30 · 60 days before funding |
| Changes to approved terms | Priya Raman, senior credit officer | Priya Raman, senior credit officer · Credit committee |
| Closing checklist signed before any disbursement | Ray Lindqvist, SBA closing manager | Ray Lindqvist, SBA closing manager · Any SBA closing manager |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample closing data · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures and rules (Coleman Report, Sept 2026 — SBA quality control reviewed 545 loans for repair or denial, Oct 2021 – Mar 2025; SBA news release 25-83 — 77,600 7(a) loans in FY2025; SBA SOP 50 10 8, effective 1 Jun 2025 — 10% injection for a change of ownership). People, companies and loans named on this page are fictional — characters and sample data in the working solution.
It is the check, before disbursement, that every term in the SBA Loan Authorization and the credit memo is met by a signed closing document — amount, rate, use of proceeds, liens, owners and guaranties, equity injection and conditions. SBA Loan Closing Review has six agents read both sides, tie each term to its document and hold funding on every loose end until a person resolves it.
The approval reader lists every term from the credit memo and Authorization with its page; the closing document reader extracts what each signed document says, with its clause and page; and the terms matcher compares meaning, not just words. Any difference in an amount, party, percentage, payee, lien, name or payment schedule is raised as a mismatch with both quotes.
Yes. It works out total project cost and the required injection, traces each dollar through seasoned statements and the donor’s account for gifts to escrow, and counts a seller note only on full standby for the life of the loan and up to half the requirement. A gift letter or a note alone is never accepted as proof of funds.
Yes. Each line of the settlement statement is tied to a use and payee the Authorization names, and every packager, broker or consultant paid in connection with the loan is checked for a Form 159. In the working solution it caught $12,500 of working capital paid to a packager with no Form 159.
Yes. It checks the debtor name on each lien filing against the state’s record and runs the search under the exact registered name. A filing the search does not find is flagged at risk, with a fix request for a new filing.
No. The closing checklist cannot be signed while any exception is open, and nothing is released until it is signed. The closer resolves each mismatch, the credit officer approves any change to approved terms, and the SBA closing manager signs.
By default, the SOP in force on each loan’s approval date, so older loans keep their rules — SOP 50 10 8 for loans approved from 1 Jun 2025. Injection, seller note, seasoning, guarantor, search-freshness and approver rules are all settings.
The Agentic Solution Engine builds and deploys it from your requirements — your SBA credit policy, closing checklist, Authorization templates and a sample of closed files — and it goes live once every quality gate has passed. We will walk you through it on your own closings first.
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