Q.  What is the purpose of the Transition Phase Alert System?

A. The Transition Phase Indicator, the tri-color graphic on the SBA Recovery Loan Queue web page, is intended to give lenders, Certified Development Companies (CDCs) and potential borrowers a simple way of knowing whether loans are being accepted into the SBA Recovery Loan Queue and the likelihood of a newly submitted recovery loan being funded.  In the first two phases of the transition period, lenders and CDCs have the choice of submitting loan applications for processing as a non-Recovery Act loan with all applicable fees and normal guaranty levels, or as a Recovery Act loan and, once conditionally approved by SBA, the application will be given a loan application number and placed in the SBA Recovery Loan Queue (“Queue”).  The color-coded Transition Phase Indicator, along with other information on the SBA Recovery Loan Queue web page provides information so that lenders, CDCs and borrowers can make an informed choice between submitting loans as non-Recovery Act loans or as Recovery Act loans subject to funds becoming available.

Green – In this early phase, a small amount of the initial funding remains and the likelihood of receiving final loan approval with Recovery Act fee relief and/or an increased guaranty level is high.  When the status of the Transition Phase Indicator is green, there is no guarantee of funding, but there is the highest likelihood throughout the green phase that new loan applications that have been conditionally approved by SBA (subject to the availability of Recovery Act funds) will be funded.

Yellow – This second phase of the transition is when loan applications in the Queue begin to experience delays awaiting funding.  The transition will shift to the yellow phase when the initial funding from the Recovery Act for the fee relief and higher guaranties is almost exhausted and additional funding only becomes available when lenders or CDCs cancel previously approved Recovery Act loans, allowing those funds to be applied to conditionally approved new loan applications or to requests for increases to previously approved Recovery Act loans. Due to the potential of long waits and the possibility of conditionally approved loan applications not being funded, the option for lenders and CDCs to submit new Recovery Act loan applications during this second phase will be open until January 15, 2010.  After January 15, 2010, the Queue will be closed to new Recovery Act loan applications.  

Red – The red phase of the transition will last from January 16, 2010 through September 17, 2010.  During the red phase, no new Recovery Act loan applications will be accepted for the Queue.  On February 15, 2010, all new loan applications remaining in the Queue that have not yet been funded with Recovery Act funds will be withdrawn by SBA.  The lender will have the option of re-submitting the loan application as a non-Recovery Act loan with all applicable fees and the normal guaranty levels.  After February 15, 2010, the only Queue available will be for requests for increases to previously approved Recovery Act loans.