SOP_50572.pdf

SBA SOP 50 57 2

7(a) LOAN SERVICING and LIQUIDATION

Office of Capital Access Small Business Administration December 1, 2015

7(a) Loan Servicing and Liquidation

50 57 2

1. Purpose: Update and consolidate SBA policy and procedures on 7(a) loan servicing and liquidation.

2. Personnel Concerned: All SBA employees.

3. SOP Replaced: SOP 50 57

4. Originator: Office of Capital Access

Ann Marie Mehlum 12/1/2015 Associate Administrator Office of Capital Access

SOP 50 57 2

Effective Date: December 1, 2015 3

Table of Contents

Chapter 1. Introduction

A. Purpose

B. Authority

C. General Policy and Goals

D. Performance Standards

E. Exceptions to Policy

Chapter 2. Definitions

A. General Terms

B. Environmental Terms

Chapter 3

A. Servicing and Liquidation

B. Litigation

C. Decision-Making

D. Recordkeeping

E. Loan Monitoring

F. Reporting Requirements

G. SBA Take Over of Servicing or Liquidation

H. Enforcement Action by OCRM

Chapter 4

A. Collection and Application of Loan Payments

B. Post-Guaranty Purchase Servicing Fee on SBA Portion of Interest Payments

C. Remittance of Borrower Loan Payments

D. Prepayment

E. Paid in Full Loans

F. Reinstatement of Guaranty on Loan Mistakenly Coded "PIF"

Chapter 5. Environmental Risk Management

A. Overview

B. General Requirements

C. When an Environmental Investigation is Required

D. Environmental Investigation Process for Loans in Regular Servicing Status

E. Environmental Investigation Process for Loans in Liquidation Status

Effective Date: December 1, 2015 4

F. Environmental Investigation Reports

G. Remedial Action by Secured Creditor

H. Taking Title to Contaminated Property or Control of Business with Environment Risks

Chapter 6. Servicing Requests

A. General Requirements

B. Review and Analysis

C. How To Obtain SBA Approval of a Proposed Loan Action

D. Implementing Loan Actions

Chapter 7. Modification of Note

A. General Requirements

B. Payment Due Date

C. Change from Revolving to Non-revolving Loan

D. Installment Amount

E. Interest Rate

F. Maturity Date

G. Loan Amount

Chapter 8

A. Subordination of Lien Position

B. Inter-creditor Agreements

C. Substitution of Collateral

D. Substitution of Guarantor

E. Release of Lien without Consideration

F. Release of Lien for Consideration

G. Release of Guarantor or Co-Borrower

H. Release of Condemnation Proceeds

Chapter 9. Insurance Coverage

A. General Requirements

B. Mortgagee’s Title Insurance

C. Hazard Insurance

D. Life Insurance

E. Flood Insurance

Chapter 10

A. General Requirements

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B. Financial Statements

C. Restrictions on Compensation, Dividends, Fixed Assets, etc

D. Standby Agreements

Chapter 11

A. Assumption

B. Assignment of Lender's Interest in Loan

C. Sale of Loan in Liquidation Status

Chapter 12. Deferments

A. Overview

B. General Rule

C. General Requirement—Temporary Cash Flow Problem

D. Deferred Amount

E. Amount of Payments during Deferment Period

Chapter 13. Delinquent Secured Senior Loans

A. General Requirements

B. Procedure for Developing Best Strategy to Protect Junior Lien Securing SBA Loan 71

C. Options

Chapter 14. Classifying Loans in Liquidation

A. When Loans Must Be Classified in Liquidation Status

B. When the Note Should Be Accelerated

C. Repurchase from Secondary Market

D. Demand Letters

E. Skip Tracing

F. Obligors in Active Military Service

G. Liquidation Plans

H. Payments and Recoveries on Loans in Liquidation Status

Chapter 15. Site Visits

A. When Required

B. Preparation

C. Goals

Chapter 16. Workouts

A. Overview

B. Required Financial Information

C. Feasibility Test

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D. Timing

E. Requirement—New Consideration from Borrower

F. Options

G. Agreement Provisions

H. SBA Approval

Chapter 17

A. General Requirements

B. Procedure for Selecting Best Method of Liquidation

C. Liquidation Methods

D. Credit Bids

E. Eviction Proceedings

F. Abandonment

Chapter 18

A. General Requirements

B. Procedure for Selecting Best Method of Liquidation

C. Liquidation Methods

D. Credit Bids

E. Abandonment

Chapter 19. Acquired Collateral

A. General Requirements

B. Acquiring Title to Collateral

C. Ownership Responsibilities

D. Expenses

E. Timeframe for Disposal

F. Sale

G. Abandonment

Chapter 20. Offer in Compromise

A. Overview

B. When Compromise is Appropriate

C. General Requirements

D. Compromise with a Going Concern

E. Offer and Supporting Documents

F. Review and Analysis of Offer

G. Inadequate Offers

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H. Payment Terms and Conditions

I. Obtaining SBA Approval

J. Completing the Compromise Process

Chapter 21. Litigation

A. General Requirements

B. Legal Counsel Hired by Lenders

C. Litigation Plans

D. SBA Take Over of Lender-serviced Litigation

E. Documentation

F. Attorney Fees and Costs

G. Suit for Judgment on Note or Guaranty

H. Judicial Foreclosure and Deficiency Judgment

I. Settlement Offers

J. Bankruptcy Proceedings

K. Probate Proceedings

L. Enforcement of Judgments

M. Application of Litigation Recoveries

Chapter 22. Expenses and Recoveries

A. Classification of Expenses

B. Recoveries

C. Payment of Non-recoverable Expenses Incurred by Lenders

D. Recoupment of Recoverable Expenses Incurred by Lenders

E. SBA Review and Approval

Chapter 23

A. Overview

B. Interest Paid on Guaranteed Portion of Loan

C. Annual Service Fee Collection

D. Requirements

E. Deadline for Lender Resolution of an SBA Purchased Loan

F. Extensions to the Prudent Liquidation Deadline

G. Consequences of Failure to Comply with the Prudent Liquidation Deadline

H. Practice Tips for Lenders

Chapter 24

A. When SBA May Deny Liability

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B. Loss Attributable to Lender

C. Repairs

D. Partial Denial of Liability

E. Full Denial of Liability

F. Voluntary Termination of Guaranty

G. Examples of When a Full or Partial Denial of Liability May Be Justified

Chapter 25 Inspector General Referrals

A. Duty to Report Irregularities

B. Irregularities Requiring Referral

C. Referral Methods

D. Required Information

E. Post-referral Responsibility

Chapter 26

A. General Requirements

B. Lender Wrap-up Report

C. SBA Charge-off

D. Referral to Treasury for Further Collection

E. IRS Notification of Cancelled Debt

F. Credit Bureau Reporting

Effective Date: December 1, 2015 9

Chapter 1.

Introduction

A. Purpose

SOP 50 57 2 sets out the standard operating policies and procedures of the Small Business Administration (“SBA”) for the administration of 7(a) Loans that have been fully disbursed and are in "regular servicing” and "liquidation" status.

Note: SBA term loans are considered fully disbursed when the loan has been closed and the final loan disbursement has been made. SBA revolving lines of credit are considered fully disbursed when the loan has been closed and the initial loan disbursement has been made. All SBA loans move from "regular servicing” status to "liquidation” status if the loan is in default and has been classified in liquidation pursuant to Chapter 14 of this SOP.

B. Authority

The policy and procedures set out in this SOP are based on Section 7(a) of the Small Business Act (15 U.S.C. § 631 et seq.), Part 120 of Title 13 of the Code of Federal Regulations, the Debt Collection Improvement Act of 1996 (“DCIA”) and the Federal Debt Collection Procedures Act.

C. General Policy and Goals

Borrowers should repay their SBA loans in accordance with the terms specified in the Loan Authorization, Note and the other Loan Documents. However, when loan servicing and liquidation actions are necessary, lenders should reflect a balancing of SBA's interest in: (1) achieving the goals of the loan program, i.e., helping entrepreneurs start, build and grow viable small businesses; and (2) maintaining the integrity of the loan program, i.e., ensuring that the Agency can maximize its recovery if the Borrower defaults on the loan.

D. Performance Standards

1. All Lenders must service and liquidate their SBA loans in a diligent, commercially reasonable manner that is free of conflicts of interest and Preferences, and is consistent with the Loan Authorization, Prudent Servicing and Prudent Liquidation practices, including the Prudent Liquidation Deadline, as defined in Chapter 2 below and the SBA Loan Program Requirements in effect at the time the action is taken. (13 C.F.R. § 120.535)

2. Nationally-chartered and state-chartered Lenders, (i.e., Lenders regulated by federal or state agencies such as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency or the National Credit Union Administration) that have a non-SBA commercial loan portfolio may use their own loan servicing and liquidation procedures provided that their procedures: (a) are acceptable to their regulators; (b) meet or exceed those used for their similarly-sized non-SBA guaranteed commercial loans; and (c) are not inconsistent with SBA Loan Program Requirements including those associated with the use of the word “must” in this SOP.

E. Exceptions to Policy http://www.sba.gov/content/small-business-act http://www.sba.gov/content/small-business-act http://www.law.cornell.edu/uscode/15/usc_sec_15_00000636----000-.html http://www.dol.gov/ocfo/media/regs/DCIA.pdf http://uscode.house.gov/download/pls/28C176.txt http://uscode.house.gov/download/pls/28C176.txt http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=e923cc2904e18130efbbd7aa6e1f950c&rgn=div8&view=text&node=13%3A1.0.1.1.16.5.224.9&idno=13 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=e923cc2904e18130efbbd7aa6e1f950c&rgn=div8&view=text&node=13%3A1.0.1.1.16.5.224.9&idno=13

Effective Date: December 1, 2015 10

Any contemplated Loan Action that is in conflict with the use of the word “must” in this SOP must be treated as an exception to policy. An exception to policy is only appropriate when the policy set forth in this SOP does not adequately address the unique circumstances regarding a particular loan, and the exception, if granted, would not contravene an applicable statute or regulation. A request for an exception to policy must be submitted in writing through the appropriate SBA Loan Center. SBA Loan Centers review and refer requests for an exception to policy to the Director of Financial Program Operations (“OFPO”) and the Director of the Office of Financial Assistance (“OFA”) for joint written approval.

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Chapter 2.

Definitions

The terms defined below have the same meaning wherever they are used in this SOP. Unless otherwise indicated, defined terms are capitalized wherever they appear.

A. General Terms

1. 7(a) Loan means a loan that was made under Section 7(a) of the Small Business Act.

2. Agency means the U.S. Small Business Administration.

3. Agent means an authorized representative, including an attorney, accountant, consultant, packager, lender service provider, or any other Person representing a loan applicant or a Lender by conducting business with SBA. (13 C.F.R. § 103.1(a))

4. Appraisal means, for SBA loan servicing and liquidation purposes, (See SOP 50 10 in effect at the time the loan was approved for SBA Loan Program Requirements pertaining to appraisals for loan origination purposes.), an expert's written opinion as to the value of specific property prepared specifically for the Lender and SBA’s use with regard to a particular SBA loan, which is obtained in accordance with following requirements:

a. Qualifications of Appraiser

An Appraisal may be performed by an appraiser, broker, auctioneer, retail inventory specialist or other expert, provided that the Person meets the following minimum qualifications:

(1) Education and Experience

Has the specific education, training and experience required to develop a professional opinion as to the value of the specific type of property involved;

(2) Licensed, Certified and Bonded

Meets all applicable government licensing, certification and bonding requirements;

(3) Independent

Has no actual, apparent or potential conflict of interest with SBA, the Lender or Obligors; and has no financial interest in the property to be appraised, provided, however, that when it is commercially reasonable, the Person who appraised the collateral may also sell it as long as the sale is widely advertised and otherwise consistent with applicable law. (For example, an auctioneer hired to appraise personal property collateral may also sell it via a public auction, provided that the sale is widely advertised and otherwise consistent with Article 9 of the Uniform Commercial Code [“UCC”].)

http://www.sba.gov/content/small-business-act http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3De53477ef1bc0ee1f3cd780f021e3bef9%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.4%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.4.0.1.1 http://www.sba.gov/lender-documentation-tool?type=sops

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b. Appraisal Standards

(1) Real Property

(a) A real property Appraisal to support a substitution of collateral Loan Action should comply with the appraisal requirements in SOP 50 10 that applied to the original collateral;

(b) A real property Appraisal should comply with the Uniform Standards of

Professional Appraisal Practice whenever required by prudent lending practices, e.g., to support Loan Actions dealing with release of liens for consideration, Protective Bids, or deeds in lieu of foreclosure, when it is apparent (based on the tax assessed value, current market conditions, condition of the property, balance owed on prior liens, etc.,) that there is plenty of equity to secure the SBA loan; and

(c) In all other cases, (i.e., when neither SBA Loan Program Requirements nor prudent lending practices require an appraisal in compliance with the Uniform Standards of Professional Appraisal Practice), a real property Appraisal may consist of a broker price opinion (“BPO”) prepared in substantial compliance with the Broker Price Opinion Board Standards. For example, a BPO may be used to support a Loan Action to abandon real property collateral if it is apparent, (based on the tax assessed value, current market conditions, condition of the property, balance owed on prior liens, etc.,) that there is little or no equity available to secure the SBA loan.

(2) Personal Property

(a) A personal property Appraisal to support a substitution of collateral Loan

Action should comply with the appraisal requirements in SOP 50 10 that applied to the original collateral;

(b) A personal property Appraisal should comply with the Uniform Standards of

Professional Appraisal Practice whenever required by prudent lending practices, e.g., to support Loan Actions dealing with unique items of personal property such as coin collections, jewelry, or art work; and

(c) In all other cases, (i.e., when neither SBA Loan Program Requirements nor prudent lending practices require an appraisal in compliance with the Uniform Standards of Professional Appraisal Practice), a personal property Appraisal may consist of an auctioneer or other expert's opinion as to value.

c. Report Format

All Appraisal reports should contain the following:

(1) The appraiser's opinion as to value of the property, including an opinion as to the individual value of any item of personal property valued at $5,000 or more at the time the loan was made;

http://www.sba.gov/lender-documentation-tool?type=sops http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/ http://www.nabpop.org/BPOs-BPOSG.php http://www.sba.gov/lender-documentation-tool?type=sops http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/ http://www.uspap.org/%23/1/

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(2) The type of valuation, e.g., liquidation or fair market value, and how the appraisal is to be used;

(3) The methodology, standards, resources and markets the appraiser used or relied on;

(4) A complete and accurate description of the collateral, including its current condition, photographs, and the manufacturer, model, and serial number of significant items of personal property, i.e., items with a Liquidation Value of $5,000 or more;

(5) The date and location of the appraisal inspection, and the effective date of the valuation;

(6) The appraiser's certification that he or she has no financial interest in the property or conflict of interest with SBA, the Lender or any Obligor; and

(7) The appraiser's qualifications and signature.

d. Age of Appraisal

Generally, an Appraisal should be less than 120 calendar days old, and must never be more than one year old, at the time SBA or the Lender relies on it to make a decision affecting an SBA loan.

5. Associate of the Borrower means an officer, director, Key Employee of the Borrower, or a Person who has an ownership interest of 20% or more in the Borrower's business;

any entity in which one or more of the foregoing Persons has an ownership interest of 20% or more in the entity's business; or any Person in control of, or controlled by, the Borrower except a Small Business Investment Company licensed by SBA. (13 C.F.R. § 120.10)

6. Associate of a Lender means an officer, director, Key Employee of a Lender or other senior lender, or owner of 20% or more of the value of the Lender's stock or debt instruments; an Agent involved in the loan process; or any entity in which one or more of the foregoing Persons, or a Close Relative of any such Person, has an ownership interest of 20% or more. (13 C.F.R. § 120.10)

7. Borrower means the Person or Persons who executed the Note evidencing the SBA loan. (13 C.F.R. § 120.10)

8. Close Relative means a spouse, parent, child or sibling, or the spouse of a parent, child or sibling. (13 C.F.R. § 120.10)

9. Computer Tracking System means the electronic method used by SBA or a Lender to create and maintain a chronological record of the significant activities on an SBA loan, such as Loan Actions and the substance of telephone calls, meetings or letters regarding the loan.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3Ddcc65128c1816ca8792d70ec11d784bc%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3Ddcc65128c1816ca8792d70ec11d784bc%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4

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10. Credit Bid means an offer to purchase at a foreclosure sale submitted by a creditor who, instead of paying cash, will "credit" the bid amount against the debt owed to the creditor.

11. Default Charges means all monetary amounts payable as the result of a default on a senior secured creditor’s loan, such as prepayment penalties, late fees and interest paid at an escalated rate.

12. Denial of Liability means a determination made by SBA pursuant to 13 C.F.R. §

120.520 and 13 C.F.R. § 120.524 that it is not obligated to purchase the guaranteed portion of the 7(a) Loan. A Denial of Liability may be for the full amount of the guaranteed portion of the loan or any part thereof.

13. Early Default means any of the following events of default that occurred either: (a) within 18 months of the initial disbursement of the loan, or; (b) within 18 months of the final disbursement of the loan if the final disbursement occurred more than six months after the initial disbursement, unless the Borrower cured the default and made the scheduled loan payments for 12 months following the 18 month period:

a. Failure to make a scheduled loan payment;

b. Funding a scheduled loan payment from the sale of collateral rather than from business operations;

c. Deferment of more than three consecutive scheduled full payments; or

d. Any other event of default that required the loan to be classified in liquidation status, e.g., bankruptcy.

14. Financial Hardship means an inability to pay for basic living expenses, i.e., the costs that must be paid to obtain the following categories of goods and services necessary for the survival of an Obligor, their spouse and dependents as defined by the most current version of the Collection Financial Standards published by the Internal Revenue Service:

(1) food and clothing; (2) out-of-pocket health care expenses; (3) housing and utilities;

and (4) transportation.

15. FTA means the entity that acts as SBA's fiscal and transfer agent. (13 C.F.R. § 120.

600(d))

16. Good Faith, whether capitalized or not, means the absence of any intention to seek an unfair advantage or to defraud another party; i.e., an honest and sincere intention to fulfill one's obligations in the conduct or transaction concerned.

17. Guarantor means a Person who executed a Guaranty as security for a Note executed by a Borrower.

18. Guaranty means SBA Form 148 (Unconditional Guarantee), SBA Form 148 L (Unconditional Limited Guarantee) or a substantially similar document executed by a Guarantor that contains an unconditional promise to pay the debt owed on a Note if the Borrower fails to pay it.

http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.5.224.1 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.5.224.1 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.5.224.5 http://www.irs.gov/individuals/article/0%2C%2Cid%3D96543%2C00.html http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D26c47f6a4c50792e4e2ba6fe433c9812%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.6.226.1 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D26c47f6a4c50792e4e2ba6fe433c9812%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.6.226.1 http://www.sba.gov/sites/default/files/sba_elending_clc_forms148.pdf http://www.sba.gov/sites/default/files/sba_elending_clc_forms148l.pdf

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19. Including, whether capitalized or not, means "including but not limited to," i.e., the list is exemplary and not exhaustive.

20. Key Employee means any Person hired by a business to manage its day-to-day operations, including, for example, the hiring and firing of employees, and the expenditure of money.

21. Lender or 7(a) Lender means an institution that has executed a Participation

Agreement (SBA Form 750) with SBA under the 7(a) Guaranteed Loan Program. (13 C.F.R. § 120.10)

22. Liquidation Plan means a Lender's written plan outlining the actions that it intends to take to maximize recovery on a specific SBA loan, which includes the information outlined in the template accessible from www.sba.gov/for-lenders.

23. Liquidation Value is the likely price collateral will sell for if sold quickly and with limited exposure to potential buyers. An Appraisal is necessary to determine the Liquidation Value of real or personal property collateral unless it consists of:

a. Cash or Equivalent—the Liquidation Value of cash or cash equivalent items such as retirement accounts, trust funds, life insurance policies with a cash surrender value, certificates of deposit, letters of credit, or other commercial instruments should be the net amount arrived at after deducting verifiable, documented costs such as penalties for early withdrawal; or

b. Motor Vehicles and Stock—the Liquidation Value of items that are customarily sold in a recognized market should be based on industry standards. For example, the Liquidation Value of motor vehicles should be based on NADA or Kelley Blue Book value, and the Liquidation Value of publically-traded stock should be based on official stock exchange prices.

24. Litigation Plan means a Lender's written plan outlining the court proceedings it intends to initiate or otherwise participate in to maximize recovery on a specific SBA loan. The plan includes the information outlined in the template accessible from www.sba.gov/for-lenders as well as any other information or documentation required by Chapter 21.

Information such as the qualifications of the attorney the Lender intends to hire, a copy of the engagement letter, and the justification for, and estimate of, any expense listed in Chapter 21, Paragraph F that is presumed to be unnecessary, unreasonable and non-customary such as the use of multiple law firms, travel, or the appointment of a receiver to perform routine liquidation duties.

25. Loan Action means an activity or decision regarding a specific SBA loan including a decision to engage or not to engage in a particular activity, such as a decision not to enter a Protective Bid at a senior lienholder's foreclosure sale.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 https://www.sba.gov/content/liquidation-plan-format http://www.sba.gov/for-lenders http://www.sba.gov/content/litigation-plan http://www.sba.gov/for-lenders http://www.sba.gov/for-lenders

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26. Loan Action Record means the paper or electronic document used to memorialize the decision and justification for a specific Loan Action. It may consist of a memo, email, letter, SBA Form 327 or other document provided that it contains: the Borrower's name and the SBA loan number; the Lender’s name and contact information; a reasonable description of the Loan Action; the justification for the Loan Action including an analysis of any Supporting Documentation; and a citation to the applicable SOP provision that provides authority for the proposed Loan Action.

27. Loan Authorization means SBA's written agreement including subsequent modifications thereto, which sets out the terms and conditions under which SBA will guarantee a loan. (13 C.F.R. § 120.10)

28. Loan Documents means the Loan Authorization, Note, Guaranty, lien instruments, and all other agreements and documents related to an SBA loan.

29. Loan File, whether capitalized or not, means the electronic or paper folder dedicated exclusively to storing a hard copy or an electronic copy of all of the Loan Documents pertaining to a specific SBA loan.

30. Loan Program Requirements are requirements imposed upon Lenders by statute, SBA regulations, any agreement the Lender has executed with SBA, SBA SOPs, official SBA notices and forms applicable to the 7(a) loan programs, and loan authorizations, as such requirements are issued and revised by SBA from time to time. (13 C.F.R. § 120.10)

31. Material Loss means: (a) with regard to personal property collateral—a single loss or the aggregate amount of multiple losses totaling $5,000 or more; and (b) with regard to real property collateral—a loss in the amount of $10,000 or more.

32. Must, whether capitalized or not, means that the action is mandatory.

33. Non-recoverable Expense means a cost that is not SBA-approved and cannot be recouped by being added to the principal balance of the Note, because the cost was not: (a) related to collection of amounts due under the Note, enforcement of the terms of the Loan Documents, or the preservation or disposal of the collateral; (b) necessary, reasonable or customary; or (c) incurred in accordance with prudent lending practices or SBA Loan Program Requirements.

34. Non-routine Litigation means: (a) all litigation where factual or legal issues are in dispute and require resolution through adjudication; (b) any litigation where legal fees are estimated to exceed $10,000 in the aggregate; (c) any litigation involving a loan where a Lender has an actual or potential conflict of interest with SBA; or (4) any litigation involving a 7(a) Loan where the Lender has made a separate loan to the same Borrower that is not an SBA loan. (13 C.F.R. § 120.540(c)(1))

35. Note means the promissory note (e.g., SBA Form 147) executed by the Borrower on an

SBA loan.

36. Obligor means any Person with direct liability for repaying an SBA loan, such as the Borrower, an assumptor, and every Person with contingent liability, such as a Guarantor.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.187.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3Ddcc65128c1816ca8792d70ec11d784bc%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3Ddcc65128c1816ca8792d70ec11d784bc%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.5.224.11 http://www.sba.gov/lender-documentation-tool?type=form&kw=note

Effective Date: December 1, 2015 17

37. Office of Financial Program Operations ("OFPO") means the SBA office in charge of administering SBA's loan program operations and managing SBA’s loan portfolio.

38. Person means any individual, corporation, partnership, Limited Liability Company, association, unit of government, or other legal entity, however organized. (13 C.F.R. § 120.10)

39. Pilot Loan Program means any program designated by SBA as a pilot loan program at the time that the loan is approved by SBA, and as of December 1, 2015, includes Community Advantage. Former pilot programs include: Patriot Express, Community Express, Go Loans, and Dealer Floor Plan.

40. Preference means an arrangement not pre-approved by SBA that gives a 7(a) Lender a preferred position compared to SBA relating to the making, servicing, or liquidation of an SBA loan. (13 C.F.R. § 120.10) E.g., a Lender would receive a Preference if it released the collateral for an SBA loan in order to use it as security for a non-SBA loan to the same Borrower.

41. Prudent Liquidation means Lenders must liquidate and conduct debt collection litigation for 7(a) loans in their portfolio no less diligently than for their non-SBA portfolio, and in a prompt, cost-effective and commercially reasonable manner, consistent with prudent lending standards, and in accordance with Loan Program Requirements and with any SBA approval of either a liquidation or litigation plan or any amendment of such a plan. Lenders and CDCs that do not maintain a non-SBA loan portfolio must adhere to the same prudent lending standards followed by commercial lenders that liquidate loans without a government guarantee. They must also operate in accordance with Loan Program Requirements and with any SBA approval of either a liquidation or litigation plan or any amendment of such a plan. (13 C.F.R. § 120.535(b)). Prudent Liquidation also means that a Lender submits a Wrap-Up Report acceptable to SBA on a SBA loan no later than either 24 months from SBA guaranty purchase date or 24 months after the effective date of this SOP for loans where SBA has previously honored the guaranty and lenders are actively liquidating, whichever is longer, unless a written extension is granted by SBA from the applicable timeframe based on extenuating circumstances.

(See Chapter 23, Paragraph J, for more information on Extensions to the Prudent Liquidation Deadline”).

42. Prudent Servicing means Lenders must service 7(a) loans in their portfolio no less diligently than their non-SBA portfolio, and in a commercially reasonable manner, consistent with prudent lending standards, and in accordance with Loan Program Requirements. Those Lenders that do not maintain a non-SBA loan portfolio must adhere to the same prudent lending standards for loan servicing followed by commercial lenders on loans without a guarantee. (13 C.F.R. § 120.535(a))

43. Protective Bid means an offer made by a secured creditor to pay a designated price for property at a foreclosure sale to "protect" the secured creditor's interest in the property that might otherwise be eliminated by the foreclosure sale.

44. Purchase, whether capitalized or not, when used in conjunction with SBA's 7(a) loan guaranty ("guaranty purchase") refers to SBA's purchase of the guaranteed portion of a 7(a) Loan.

45. Purchase Package means the packet of documentation prepared and submitted by a http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D288d421f301c21c967f6120a859bb163%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D288d421f301c21c967f6120a859bb163%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D288d421f301c21c967f6120a859bb163%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D288d421f301c21c967f6120a859bb163%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4 http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D288d421f301c21c967f6120a859bb163%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.0.189.4

Effective Date: December 1, 2015 18

7(a) Lender to support its request to have SBA honor its guaranty by purchasing the guaranteed portion of a loan.

46. Real Estate Owned ("REO") means real property collateral acquired by a Lender or

SBA.

47. Recoverable Expense means an SBA-approved, necessary, reasonable and customary cost incurred to collect amounts due under the Note, to enforce the terms of the Loan Documents, or to preserve or dispose of collateral, which according to the terms of the Note, can be recouped by adding it to the principal balance of the loan.

48. Recoverable Value means the net dollar amount that a prudent lender could reasonably expect to recover by liquidating a particular piece of collateral. Recoverable Value is determined by deducting the following amounts from the Liquidation Value of the collateral: (a) the balance owed on senior liens (less amounts waived or subordinated by a Loan Document); (b) Recoverable Expenses associated with any necessary lien foreclosure action; and (c) if the collateral is likely to be acquired by SBA or the Lender at the foreclosure sale (e.g., real property), the expenses associated with the care, preservation and resale of the acquired collateral.

49. Repair means an agreement between SBA and a 7(a) Lender as to a specific dollar amount that will be deducted from the amount SBA pays on the Lender's SBA loan guaranty in order to fully compensate SBA for an actual or anticipated loss on the loan caused by the Lender’s actions or omissions. A Repair does not reduce the percent of the loan guaranteed by SBA or SBA’s pro-rata share of expenses or recoveries.

50. Routine Litigation means uncontested litigation, such as non-adversarial matters in bankruptcy and undisputed foreclosure actions, the estimated legal fees for which will not exceed $10,000 in the aggregate. (13 C.F.R. § 120.540(c)(2))

51. SBA Loan Center means the following SBA facilities:

a. SBA Standard 7(a) Loan Guaranty Processing Center (“LGPC”)

Geographic Coverage: SBA Regions 1-10

Loan Type and Status: All term loans not yet fully disbursed and undisbursed revolving line of credit loans.

Street Address: 6501 Sylvan Road, Suite 122, Citrus Heights, CA 95601

Web Site Address: http://www.sba.gov/CitrusHeightsLGPC

Telephone Number: Toll Free: (877) 475-2435

Email: 7(a) Servicing: 7aloanmod@sba.gov ARC Servicing: ARCloanmod@sba.gov ARC Form 1502 Issues: ARC1502Inquiries@sba.gov

b. SBA Commercial Loan Service Center (“CLSC”) West

Geographic Coverage: SBA Regions 5, 6 (except for Arkansas, Oklahoma and Texas) 7, 8, 9, and 10.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr%3Bsid%3D6f99b4b3e9a9f88478c2bf65dfd47599%3Brgn%3Ddiv5%3Bview%3Dtext%3Bnode%3D13%3A1.0.1.1.16%3Bidno%3D13%3Bcc%3Decfr&13%3A1.0.1.1.16.5.224.11 http://www.sba.gov/CitrusHeightsLGPC mailto:7aloanmod@sba.gov mailto:ARCloanmod@sba.gov mailto:ARC1502Inquiries@sba.gov

Effective Date: December 1, 2015 19

Loan Type and Status:

(1) All fully disbursed 7(a) Loans classified in regular servicing status;

(2) Small Loan Advantage, Express and Pilot Loan Program 7(a)Loans, including

Community Advantage loans, in liquidation status;

(3) 7a Small Loans, Certified Lender Program (CLP) Loans and PLP 7(a) Loans with a Gross Approval Amount up to and including $350,000 that were approved on or after January 1, 2014 that are in liquidation status; and

(4) ARC loans classified in servicing and liquidation status.

Street Address: 801 R Street, Suite 101, Fresno, CA 93721

Web Site Address: http://www.sba.gov/FresnoCLSC

Telephone Numbers:

Phone: (559) 262-4960 Toll Free: (800) 347-0922

Fax Numbers:

Servicing: (202) 481-0483 Express Purchase: (202) 481-0663 Post-Servicing: (202) 481-1756

Email:

Servicing: fsc.servicing@sba.gov Express Purchase: fsc.expresspurchases@sba.gov Post-servicing: fsc.postservicing@sba.gov ARC Servicing: ARCloanmod@sba.gov ARC Form 1502 Issues: ARC1502Inquiries@sba.gov

c. SBA Commercial Loan Service Center (“CLSC”) East

Geographic Coverage: SBA Regions 1, 2, 3, 4, and 6 (except New Mexico and Louisiana).

(1) All fully disbursed Loans 7(a) Loans classified in regular servicing status;

(2) Small Loan Advantage, Express and Pilot Loan Program 7(a)Loans, including

Community Advantage loans, in liquidation status;

(3) 7a Small Loans, CLP Loans and PLP 7(a) Loans with a Gross Approval Amount up to and including $350,000 that were approved on or after January 1, 2014, that are in liquidation status; and

(4) ARC loans classified in servicing and liquidation status.

Street Address: 2120 Riverfront Drive, Suite 100, Little Rock, AR 72202-1794

Web Site Address: http://www.sba.gov/LittleRockCLSC

Phone: (501) 324-5871 Toll Free: (800) 644-8564 http://www.sba.gov/FresnoCLSC mailto:fsc.servicing@sba.gov mailto:fsc.expresspurchases@sba.gov mailto:fsc.postservicing@sba.gov mailto:ARCloanmod@sba.gov http://www.sba.gov/LittleRockCLSC

Effective Date: December 1, 2015 20

Fax Numbers:

Servicing: (202) 292-3878 Liquidation: (202) 481-6481

Servicing: lrsc.servicing@sba.gov Liquidation: lrsc.504liquidation@sba.gov Customer Service: lrsc.customerservice@sba.gov Express Purchase: LRSC.ExpressPurchase@sba.gov

d. National Guaranty Purchase Center ("NGPC")

Geographic Coverage: SBA Regions 1-10

(1) All Standard, CLP, and PLP and 7(a) Loans approved before January, 1 2014 classified in liquidation status

(2) Standard 7a, CLP and PLP 7(a) Loans with a Gross Approval Amount over

$350,000 that were approved on or after January 1, 2014 in liquidation status;

and

(3) All EWCP 7(a) Loans.

Street Address: 1145 Herndon Parkway, Suite 900, Herndon, VA 20170

Web Site Address: http://www.sba.gov/HerndonNGPC

Phone: (703) 487-9283 Toll Free: (877) 488-4364

Fax Number:

General: (202) 481-4674 Expense Reimbursement: 202-481-4599 Wrap-up Reports: 202-292-3789

General inquiries: loanresolution@sba.gov Loans sold on the secondary market: secondarymarketliq@sba.gov Loans not sold on the secondary market: sbapurchase@sba.gov Expense Reimbursement: SBACPC@sba.gov Wrap-up Reports: SBAChargeoff@sba.gov

e. U. S. Export Assistance Centers (“USEACs”)

Loan Type and Status: All revolving and non-revolving Export Working Capital (“EWCP”) loans in regular servicing status.

Geographic Coverage and Contact Information: Available at https://www.sba.gov/content/us-exports-assistance-centers mailto:lrsc.servicing@sba.gov mailto:lrsc.504liquidation@sba.gov mailto:lrsc.customerservice@sba.gov mailto:LRSC.ExpressPurchase@sba.gov http://www.sba.gov/HerndonNGPC mailto:loanresolution@sba.gov mailto:secondarymarketliq@sba.gov mailto:sbapurchase@sba.gov mailto:SBACPC@sba.gov mailto:SBAChargeoff@sba.gov https://www.sba.gov/content/us-exports-assistance-centers

Effective Date: December 1, 2015 21

52. Seasoned Loan or a loan that is “Seasoned” means that for 18 months after the initial disbursement or 18 months after the final disbursement if it occurred more than six months after the initial disbursement, or if there was a default, the Borrower cured it and for 12 months following the 18 month post-disbursement period, the Borrower did not:

a. Fail to make a scheduled loan payment;

b. Fund a scheduled loan payment from the sale of collateral;

c. Have more than three consecutive scheduled full payments deferred; or

d. Experience an event of default that required the loan to be classified in liquidation.

53. Servicing Request means a Loan Action requested by a Borrower regardless of whether it is simple (e.g., address change) or more complex such as the Loan Actions covered in Chapters 7 through 12 of this SOP (e.g., subordination of lien position).

54. Should, whether capitalized or not, means that the action is recommended but not required.

55. Site Visit Report means the paper or electronic record documenting the Lender’s findings and conclusions after visiting the Borrower’s business premises. A post-default Site Visit Report should cover, for example, the Lenders efforts to: determine whether a workout is feasible; identify the collateral available for liquidation; establish the collateral’s Recoverable Value; determine whether the Borrower is behind on the rent and whether a liquidation sale of the personal property collateral can be held on-site;

determine whether any real property collateral is occupied by a Person other than the Borrower; develop a liquidation strategy; assess any environmental risk associated with the anticipated method of liquidation; and arrange for the care and preservation of the collateral pending liquidation.

56. Supporting Document or “Supporting Documentation” means the original, or a complete and accurate executed copy, (i.e., it must contain all of the required signatures and include all of the addendums thereto), of any document relied upon to reach a decision regarding a Loan Action, e.g., a purchase and sale agreement, Appraisal or Environmental Investigation Report.

57. Treasury means the U.S. Department of the Treasury Bureau of Financial Management

Service.

58. Wrap-up Report refers to the documentation, whether or not it is titled “Wrap-up Report,” that a Lender must provide in electronic format to the SBA Loan Center for review and approval by SBA It includes the information outlined in the template accessible from http://www.sba.gov/for-lenders.

B. Environmental Terms

Definitions of the environmental terms used in this SOP, which are capitalized when they appear, are located in Appendix 2 of SOP 50 10, the most current version of which is accessible from the SOP section of SBA’s Web site.

http://www.sba.gov/content/sba-charge-procedures-summary-suggested-wrap-report http://www.sba.gov/for-lenders

Effective Date: December 1, 2015 22

Chapter 3.

Lender Responsibility and Authority

A. Servicing and Liquidation

7(a) Lenders must service and liquidate:

1. All of the SBA loans in their portfolio both before and after SBA purchases the guaranteed portion.

2. The entire debt owed on each 7(a) Loan—not just the Lender's portion—regardless of the guaranteed percentage or whether the guaranty has been purchased.

Note: Pursuant to the Secondary Market Improvements Act of 1984, in addition to facilitating the sale of SBA loans to secondary market investors and keeping track of current and prior registered holders ("investors"), whenever a 7(a) Loan is sold on the secondary market, the FTA is responsible for:

1. Tracking loan payment histories;

2. Collecting payments from Lenders on loans sold to investors, (Lenders are permitted to make one payment each month to cover all of the loans they have sold.);

3. Resolving Form 1502 reporting discrepancies with Lenders;

4. Remitting payments to investors, (FTA sends one check to the investor that includes an accounting of the funds for all loans held by that investor.);

5. Forwarding all Servicing Requests from a Lender to the investor and forwarding the response back to the Lender;

6. Notifying SBA of delinquent loans; and

7. Handling SBA and Lender repurchases from investors.

B. Litigation

Lenders are responsible for conducting all litigation needed to ensure recovery on all of the SBA loans in their portfolios except those loans that have been referred to Treasury pursuant to Chapter 26. After a loan has been referred to Treasury, SBA has sole authority to conduct any litigation that may become necessary; and Lenders must immediately notify the SBA Treasury Offset Division (via fax 202-481-0592 or email BirminghamTOPS@sba.gov) of any pending litigation, including bankruptcy filings, so that the loan can be recalled from Treasury and appropriate action taken by SBA legal counsel.

(See Chapter 21 for information on litigation, including when SBA’s prior written approval of a Lender’s Litigation Plan is required.)

C. Decision-Making

1. Unilateral Authority

Lenders have unilateral authority to take all necessary action to service and liquidate the 7(a) Loans in their portfolio. This authority is subject to SBA’s right to take over the servicing or liquidation of any loan as provided in Paragraph G and except as provided in Subsections 2 and 3 below, provided that their actions are consistent with the performance standards set out in Chapter 1.

http://www.sba.gov/category/lender-navigation/lender-reporting mailto:BirminghamTOPS@sba.gov

Effective Date: December 1, 2015 23

2. Unilateral Actions

Lenders must notify the appropriate SBA Loan Center in writing or via e-Tran when they take substantive unilateral Loan Actions. For a specific list of unilateral actions and information on how to notify SBA, see the most recent version of the 7(a) Lenders Servicing and Liquidation Matrix. Unilateral actions are conditioned by whether the loan guarantee has been sold in the Secondary Market. Pursuant to the Form 1086, or its successor form, changes made to the terms and conditions of the sold Note other than the single unilateral deferment option, require the prior written consent from the Registered Holder.

3. Actions Requiring Prior Written SBA Approval

Lenders must obtain SBA’s prior written approval before taking any Loan Action that involves:

a. Exception to policy;

b. Preference;

c. Conflict of interest: real, apparent or potential;

d. Sale or lease of collateral or acquired collateral to the Lender, an Associate of the

Lender, an employee of the Lender, or a Close Relative of an employee of the Lender;

e. Sale or lease of collateral or acquired collateral to an Obligor or a Close Relative or

Associate of an Obligor;

f. Release of a co-Borrower or Guarantor;

g. Compromise of the principal loan balance, including actions that legally extinguish the deficiency balance of a loan, such as a Deed in Lieu of foreclosure, etc.;

h. Assumption of the loan with release of an Obligor;

i. Extraordinary servicing fee;

j. Prepayment that requires a subsidy recoupment fee;

k. Liquidation Plan or amended Liquidation Plan for a CLP loan;

l. Litigation Plan or amended Litigation Plan;

m. Acquisition of title to any property in SBA’s name;

n. Acquisition of title to Contaminated property in SBA’s name or the Lender’s name;

o. Operation or control of a business that handles Hazardous Substances;

p. Operation or control of a business located on Contaminated Property;

http://www.sba.gov/content/e-tran-login http://www.sba.gov/content/servicing-and-liquidation-actions-7a-lender-matrix

Effective Date: December 1, 2015 24

q. Increase in SBA’s guaranty percentage:

r. Increase or decrease in the loan amount:

• For non-delegated loans lenders must submit requests to the appropriate SBA loan servicing center to have a loan amount increased or decreased;

• For delegated loans lenders must obtain approval for increases or decreases in the loan amount directly in e-Tran;

s. Reinstatement of SBA’s guaranty;

t. Emergency purchase of the loan from the secondary market; or

u. Transfer or sale of more than 90% of the loan.

As mentioned previously, lender servicing actions are conditioned by whether the loan guarantee has been sold in the Secondary Market. Pursuant to the Form 1086, or its successor form, changes made to the terms and conditions of the sold Note other than the single unilateral deferment option, require the prior written consent from the Registered Holder

4. Where to Send Notices and Requests for SBA Approval

a. Prior to Full Disbursement

Notices and requests for SBA’s prior approval pertaining to loans that have been approved but are not fully disbursed should be sent to the LGPC.

b. Post-Full Disbursement

Notices and requests for SBA’s prior approval pertaining to loans that have been fully disbursed should be sent to the appropriate CLSC (at Fresno or Little Rock) or to the NGPC at Herndon. (See the definition of “SBA Loan Center” in Chapter 2 for a complete list.)

c. Revolving Line of Credit Loans

Notices and requests for SBA’s prior approval pertaining to revolving lines of credit loans that have had at least one disbursement should be sent to the appropriate CLSC (at Fresno or Little Rock) or to the NGPC at Herndon. (See the definition of “SBA Loan Center” in Chapter 2 for a complete list.)

Note: SBA Loan Centers should respond to Lenders’ requests for approval of proposed Loan Actions within 15 business days from the date SBA received the request. (13 C.F.R. § 120.541)

5. Requests for Reconsideration

When SBA’s prior approval is required, a request…