SBA SLPC directive from its August 28, 2026, Weekly Update
"Please note that when submitting loan applications for borrowers with an EPC/OC structure, the financial statements should be consolidated for the two entities, as SBA views the EPC and OC as a single economic unit for the loan application. The EPC’s only source of income is usually the rent paid by the OC, which should not exceed the debt service; individual statements do not show true cash flow. Lenders need to combine the statements and eliminate the internal rent expense and rental income to assess the true Debt Service Coverage Ratio (DSCR) of the combined entity.”
The following steps should be followed to create this Consolidated Spread until the Ventures system has the ability to do so directly in the platform. This enhancement is currently in development.
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Export the financial spreadsheet to Excel.
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Make the appropriate adjustments to eliminate internal rent expense and rental income between the combined entities, along with any other necessary intercompany adjustments.
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Create a new entity named “EPC + OC Consolidated.” Select Association as the entity type and mark the entity as Inactive.
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In Loan Analysis, add a financial record for the new consolidated entity and spread the required number of years using the adjusted figures from the Excel spreadsheet.
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Generate the Credit Memo and include each individual entity along with the new consolidated entity record.
