2012 Lender Roundtables

Transcription

1 2012 Lender Roundtables

2 Resources SBA Loan Programs SOP (E) (current version) Lender Newsletters ( The Lender s Advantage ) Wichita District Office

3 Standard 7(a) SBA reviews credit & eligibility at Loan Guaranty Processing Center (LGPC in Citrus Heights, CA) Maximum loan amount (gross) is $5,000,000 Maximum guaranty amount is $3,750,000

4 Standard 7(a), Cont. 85% guaranty on loan amounts of $150,000 and less 75% guaranty on loan amounts over $150,000 Ongoing Servicing Fee (paid by lender) - 55 basis points (0.55%) of guaranteed portion Guaranty Fee (paid by borrower) - 2% to 3.75%+ of guaranteed portion - Tiered structure based upon loan amount

5 Application Process Standard 7(a), Cont. - Go to - Find Forms, SOPs, Notices and More - Standard 7(a) LGPC 10-Tab Submission Instructions - Submit via *Electronic File Transfer (Recommended Method!): Send This File link * (if under 9 megabytes) to 7aloanprogram@sba.gov

6 Standard 7(a), Cont. *Fax (606) *Mail to: Standard 7a Loan Guaranty Processing Center CA 6501 Sylvan Road Suite 122 Citrus Heights, CA OR Standard 7a Loan Guaranty Processing Center - KY 262 Black Gold Boulevard Hazard, KY 41701

7 Small/Rural Lender Advantage Designed for lenders that make < 20 SBA loans per year Streamlined SBA loan application SBA reviews credit & eligibility at Loan Guaranty Processing Center (LGPC in Citrus Heights, CA) Maximum amount - $350,000 Guaranty % and fees same as Standard 7(a)

8 Small/Rural Lender Advantage, Cont. Application Process - Go to - Find Forms, SOPs, Notices and More - SBA Forms 2301, Parts A, B and C plus detailed Lender s Credit Memorandum - Submit like Standard 7(a)

9 SBA Express & Patriot Express Very streamlined SBA loan application Lenders allowed to use mostly their own forms, analysis and procedures Lenders must apply for status SBA reviews eligibility only Maximum loan amount $350,000 (Express) & $500,000 (Patriot Express)

10 SBA Express & Patriot Express, Cont. Guaranty %: SBA Express 50% & Patriot Express same as Standard 7(a) Fees same as Standard 7(a) Can be used for Revolving Lines of Credit and/or Term Loans

11 SBA Express & Patriot Express, Cont. Application Process - Go to - Find Forms, SOPs, Notices and More - SBA Forms 1920SX, Parts A, B & C plus SBA Form 1919 completed by borrower (keep all in your file) - Must submit via E-Tran. Do not Fax! - After approval, prepare Authorization (keep in your file)

12 Issues To Watch Out For Franchise, License, Dealer, Jobber Agreements - SBA requires a determination as to whether affiliation exists when applicant has or will have any of these agreements - Review/determination is conducted by: *SBA on Standard 7(a), S/RLA *Lender on SBA Express, Patriot Express, PLP

13 Issues To Watch Out For, Cont. - Pages of SOP SBA Form 912: Yes Response - Pages of SOP - Generally cannot be submitted Express/Patriot Express Tax Verification IRS Form 4506-T - Pages of SOP

14 Issues To Watch Out For, Cont. Change of Ownership - Pages of SOP - Seller cannot remain as an officer, director, stockholder or key employee. Can remain as consultant for period not to exceed 12 mos. - If real estate is involved, it cannot be financed separately by non-sba guaranteed loan unless SBA loan receives a shared collateral position (piggyback).

15 Issues To Watch Out For, Cont. - Business Valuation required at time of application *By lender if amount being financed less appraised value of real estate and/or M&E is $250,000 or less *By qualified source if amount being financed minus appraised value of real estate and/or M&E > $250,000 or close relationship between buyer and seller. Definition of qualified source on pages 194 of SOP

16 Issues To Watch Out For, Cont. - Site visit of assets required. Lender s loan documentation must include date of site visit and comments - Analysis as to how change of ownership will benefit the business (not just buyer and seller) required in lender s loan documentation. Explain how change of ownership will be in the best interests of the business and its continued, successful operations (i.e. younger, more attentive management or jobs lost if seller just liquidates)

17 Issues To Watch Out For, Cont. - When purchasing a division or part of an existing business: *Must have tax returns or some type of financials from seller *Must verify seller s financial info with 4506-T or some other form of verification (i.e. sales tax payments records) unless waived by SBA

18 Issues To Watch Out For, Cont. Debt Refinance - Pages of SOP - Seller carry-back financing can only be refinanced if it has been in place and current for at least 24 months, and still meets all regular SBA debt refinance requirements - When refinancing same institution debt, lender must explain any late payments during last 36 mos.

19 Issues To Watch Out For, Cont. - Lender may not reduce it s exposure with an applicant under SBA Express or Patriot Express Environmental - SBA requires an Environmental Investigation of all commercial property upon which a mortgage will be taken - Compare NAICS code to environmentally sensitive industry list on pages of SOP

20 Issues To Watch Out For, Cont. - If there is NAICS match, begin with Phase I - If there is not NAICS code match: *If loan amount is $150,000 or less, may begin with Environmental Questionnaire *If loan amount > $150,000, must begin with at least Environmental Questionnaire and Records Search with Risk Assessment - Gas Stations have additional requirements (pg. 371 of SOP)

21 Issues To Watch Out For, Cont. - On 7(a) and Small/Rural Lender Advantage Loans, submit Environmental Investigation to SBA for approval prior to disbursement - On Express & Patriot Express, Lender is solely responsible for Environmental Investigation and following SBA environmental policies and procedures in SOP

22 Loan Servicing & Liquidation Primary Resource - Servicing and Liquidation Actions 7(a) Lender Matrix *Divides Servicing Actions into 2 groups: 1) Actions prior to initial disbursement 2) Actions after initial disbursement *SOP (E) states all modification requests through final disbursement must be approved by the LGPC (Loan Guaranty Processing Center, Citrus Heights, CA)

23 Loan Servicing & Liquidation, Cont. *All actions fall into 1 of 3 categories: 1. SBA Approval Required 2. SBA Notification Required 3. No Approval or Notification Required *Use , E-Tran Servicing function or Form 2237 to request SBA approval or notify SBA

24 Loan Servicing & Liquidation, Cont. *Lender Documentation for Actions (Important) pg. 3 *Footnotes for Some Actions explained on pg. 4 Note: (Footnote12 is link to Form 2237) *Center addresses for questions and submissions pg. 3 Wichita District Office Contact *Linda McMaster (316) or linda.mcmaster@sba.gov

25 Loan Servicing & Liquidation, Cont Reporting *SBA Form 1502 is mandatory *Used to report loan balances, payments, ongoing servicing fees and status information on all SBA loans in lender s portfolio *COLSON Services Corp. is the collection agent *Submit SBA Form 159 (if applicable) to COLSON prior to first reporting via Form159@COLSONServices.com

26 Loan Servicing & Liquidation, Cont. *1502 reporting begins with SBA loan approval. COLSON does not identify loans for lender to report each month. It is lender s responsibility to identify loans, report status correctly & correct any errors reported to lender by COLSON.

27 Loan Servicing & Liquidation, Cont Most Common Errors Non-reported or lapse in reporting of loans. All SBA loans are reported on 1502 report beginning with loan approval & continuing through life of loan or until SBA honors its guaranty. Loans with no activity still require reporting. Erroneous reporting of outstanding balance. Loan balance is reported as of the last day of the month & at guarantied percentage.

28 Loan Servicing & Liquidation, Cont. Misunderstanding or Ignoring error report. COLSON sends error report each time information reported does not balance with information on file. These reports require attention. Omission of or Erroneous Status Codes. Status codes are not required for loans disbursed, current or days past due. (This status is calculated on interest paid to date). All other loans require a status code. Non-coordination between loan officer and person creating 1502 report.

29 1502 Report Contact Info COLSON Services website at COLSON Services Telephone # (877) SBA s website at: Wichita District Office contact: Sherry L. Clary (316) , Ext. 263 or sherryl.clary@sba.gov

30 Loan Servicing & Liquidation, Cont. Liquidation and Litigation Action guidance on pg. 2 of Matrix SOP Lender must Fresno Servicing Center to notify SBA that loan should be placed in liquidation: fsc.purchasing@sba.gov

31 Guaranty Purchase SBA Express, Patriot Express, Community Express & ARC Loan purchases are processed in Fresno Loan Servicing Center All other purchases (Standard 7(a), Small/Rural Lender Advantage, PLP, etc.) are processed in National Guaranty Purchase Center in Herndon, VA

32 Guaranty Purchase, Cont. 10 Tab Purchase Demand Kits *Fresno (all Express Loans & ARC) urchasedemand.pdf *Herndon (all Standard 7(a), S/RLA & PLP Loans) 7a-guaranty-purchase-package-tabs.pdf

33 Guaranty Purchase, Cont. Recovery Act Certifications Required *SBA Information Notice *Applies to loans with increased guaranty and/or fee waiver *Certification of compliance with immigration laws and hiring practices *Certification that no loan proceeds will be used for a restricted purpose such as a casino, aquarium, zoo, golf course or swimming pool

34 Guaranty Purchase, Cont. *Certifications must be dated prior to loan disbursement *Required certifications may be included on Eligibility Questionnaires or Borrower Certification Forms signed at closing

35 Guaranty Purchase, Cont. ARC Loan Purchase Requirements *Tab 4 - Fresno Purchase Demand Kit *Only one eligible use of loan proceeds: make payments on qualifying small business loans *Must have copies of signed debt instruments

36 Guaranty Purchase, Cont. *Credit card debt Must have copies of credit card statements and documentation of the type & business purpose of each purchase. Borrower must certify proceeds are being used only for business-related debt

37 Guaranty Purchase, Cont. Common Errors in Purchase Packages That Delay Processing No Tabs Transcript not signed, not on SBA Form 1149 &/or doesn t match 1502 Report Evidence of equity injection missing (early default) Settlement sheets incorrect or don t have supporting documentation (early default)

38 Guaranty Purchase, Cont. IRS Tax Verification Missing (early default) Site Visit Reports Missing Wire Transfer Information Missing

39 Guaranty Purchase, Cont. Top Reasons for Repair & Denial Lien & Collateral Issues that Result in Missed Recoveries (i.e. failure to obtain required lien position, failure to properly perfect security interest) Unauthorized Use of Proceeds (i.e. proceeds disbursed unlike stated in authorization or subsequently modified without justification)

40 Guaranty Purchase, Cont. Liquidation Deficiencies (i.e. No Site Visit conducted, improper safeguarding/disposition of collateral, misapplication of recoveries to lender s loan when SBA loan has lien priority) Undocumented Servicing Actions (i.e. Liens not properly renewed, release/subordination of collateral without documented justification) Missing/Unsupported Verification of Equity Injection & Source

41 Guaranty Purchase, Cont. No IRS Income Tax Verification Ineligible Franchise (Denial) Ineligible Loan Purpose (Denial)

42 Thank you! Questions?