**Guide for Multi-State Expansion Requests**

This Guide is intended to supplement the applicable SBA rules,
regulations and policies not to replace them. If a conflict should arise
between this general list of requirements and applicable SBA rules,
regulations and policies, the applicable SBA rules, regulations and
policies shall prevail.

1\) The CDC must apply to the SBA District Office that services the area
within the state that the CDC intends to locate its principal office for
that state. The request must include:

 

> (a)  The CDC must demonstrate that the state that it seeks to expand
> into is contiguous to the state of its incorporation.  \[§120.802,
> Definitions\]
>
> (b)  A listing of the 25 new members that meets the requirements
> contained in §120.822 (a). \[§120.835(c)(2)\]
>
> (c)  A listing of the new members of the loan committee that meets the
> requirements contained in §120.823. \[§120.835(c)(2)\] For loan
> committee members, provide 1081s and if necessary fingerprint cards.
>
> (d)  The address where the CDC's principal office in the new state
> will be located and a copy of the lease if the space is to be leased
> \[§120.835(c)\].     
>
> (e)  A certified copy of the resolution of the Board of Directors
> (BOD) approving the expansion; a certified copy of any changes to the
> articles of incorporation that are required; and a certified copy of
> any bylaw changes that are required (or a statement that no changes
> are required).
>
> (f)  After the CDC's attorney has had an opportunity to review
> corporate documents and minutes of board and membership meetings, the
> CDC's attorney is to provide a written statement certifying that the
> CDC is operating in compliance with its articles and by-laws and is in
> good standing with its State of incorporation. If registration as a
> foreign corporation is required, provide a copy of the registration.
>
> (g)  Evidence that the CDC currently meets the requirements of an ALP
> CDC.  (This includes those CDCs that are ALP CDCs already.) 
>  \[§120.840 & §120.841, Qualifications for the ALP\]. *See Attached
> ALP Guide \[§120.835(a)\]*
>
> (h)  A copy of the binder page of the Board of Directors' current
> liability insurance or a Certificate of Insurance reflecting at least
> \$1,000,000 Liability coverage and a deductible/retention of not more
> than \$10,000. \[SOP 50 10 (4) Page 493\]
>
> (i)  The name of the designated attorney licensed to practice in the
> new state. Include proof that the designated status is current and
> provide a copy of the binder page of the attorney's current
> malpractice insurance or a Certificate of Insurance reflecting at
> least \$1,000,000 Liability coverage and a deductible/retention of not
> more than \$10,000. The certificate must either contain the name of
> the designated attorney or provide it in an attachment. \[§120.841(e),
> SOP 50 10 (4) Page 496\]
>
> (j)  A copy of the CDC's most recently published CDC Management Report
> demonstrating that:
>
>  1) The CDC's portfolio performance passes 4 of the 5 the SBA
> established risk benchmarks.
>
>  2) All statuses are current or in compliance;
>
>  3) There are no loans listed under the "Loans 90 or More Days Past
> Due" category;
>
> 4\) There are no loans listed under "Loans in Catch-Up That Missed At
> Least 3 Consecutive Payments." 
>
> 5\) If there are loans under Nos. 3 and 4, then the CDC should explain
> what action has been taken, such as a deferment or a request that SBA
> purchase the debenture.
>
> 6\) The CDC's Annual Report submission is current and the Annual
> Report is in compliance. *See attached Annual Report Guide*.
>
> (k)  Provide a summary of the qualifications and experience of those
> loan officers who will be responsible for marketing, packaging,
> processing and servicing the loans in the expanded area.  If the loan
> officers are new employees, provide a complete 1081 and fingerprint
> card (as required) for each employee.  If the new employees will be
> provided under contract, submit a contract for their services that
> meets the regulations governing contracts \[§120.824\]. *See attached
> Professional Services Contract Guide.*
>
> (2)  Analysis by the SBA Office where the CDC is expanding (to
> Headquarters):

                  Provide comments on:

> (a)  Any previous experience with the applicant, including comments on
> the CDC's ability to handle an increase in loan servicing activity
> including on-site servicing of an expanded geographic area.
>
> (b)  Compliance of any new contracts with SBA regulations
> \[§120.824\].
>
> (c)  Comments from other SBA District Offices that have dealings with
> the applicant, including Servicing Centers. \[§120.837\]
>
> (d)  Any other pertinent comments regarding the CDC's operations.     

(3) Multi-State CDCs must maintain a separate accounting for each State
    of all 504 fee income and expenses and provide, upon SBA's request,
    evidence that the funds resulting from its Multi-State CDC
    operations are being invested in economic development activities in
    each State in which they operate\[§120.825\]

If the district office's analysis determines that the CDC is in
compliance with SBA's regulations and policies governing CDCs, forward
the CDC's application along with the District Office's analysis and
recommendation to the Director, Loan Programs Division, Office of
Financial Assistance.  If the District Office's analysis determines that
the CDC is not in compliance with SBA's regulations and policies
governing CDCs, return the application to the CDC identifying the
outstanding issues to give the CDC an opportunity to come into
compliance.