SBA Cans the Personal Resource Test

Acquisition Financing
SBA Cans Personal Resources Test

The final rule for the SBA 7(a) and 504 loan programs was published in the Federal Register today. One of the most significant changes is the elimination of the Personal Resource Test. The change is effective April 21, 2014.

The Personal Resource Test requires banks to certify that the borrower doesn’t have additional resources that should be used to support the business.

For commentary on why the SBA eliminated the rule, see Why SBA Wants to Eliminate the “Personal Resource Test” on the Coleman Report. According to Bob Coleman,

The agency is now questioning whether the existence of personal resources directly correlates to the ability to obtain commercial credit on reasonable terms and is, therefore, rethinking the appropriateness of using personal resources as an indirect means of determining whether credit is available from private sources.

Here is a link to the rule in the Federal Register. Here’s a link to the current Personal Resource Test rule.

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