After receiving a tremendous amount of pushback and requests for clarification from IBAT and community banks in response to their August 26 letter to over 5,000 lenders, the Small Business Administration (SBA) released a follow-up letter dated September 30 that substantially eases compliance obligations for community banks.
Key Takeaways:
- The SBA says that banks under $30 billion in assets supervised by federal banking regulators can “demonstrate compliance” by completing a brief model form provided by SBA attached to the letter.
- The follow-up letter makes it clear that only a “reasonable review” of existing records is required, allowing community banks to rely on current staff and systems capabilities without incurring undue costs.
- Submitting the model form demonstrates a “good faith” compliance effort and is not a formal attestation.
- Community banks have until January 5, 2026, to submit the form, rather than the December deadline in the original directive.
