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Senate Passes SBA Bills Increasing Appraisal Threshold

The Senate passed two pieces of legislation Dec. 19 that link the Small Business Administration’s appraisal threshold to the threshold for commercial real estate as established by the federal bank regulatory agencies. Identical legislation passed the House in September.
The bills are S. 3552, the 7(a) Real Estate Appraisal Harmonization Act, and S. 3553, the Small Business Access to Capital and Efficiency Act. 
The SBA appraisal threshold is set by statute and currently stands at $250,000. If President Trump signs the legislation, SBA loans for commercial transactions below $500,000 would no longer require an appraisal. Passage of these bills would expose a majority of the SBA loan portfolio to significant collateral risk.
Additionally, the National Credit Union Administration has proposed quadrupling (to $1 million) the appraisal threshold for non-residential loans made by credit unions, which potentially could push the federal banking regulatory agencies to follow with an additional round of threshold increases.
The Appraisal Institute has previously expressed opposition to the SBA threshold increase and to the NCUA’s proposal to quadruple the appraisal threshold for non-residential loans.

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