The SBA Office of Credit Risk Management (“OCRM”), conducts continuous, risk-based lender oversight on all SBA lenders and CDCs. As part of this oversight, the OCRM conducts periodic on-site audits to evaluate the lender or CDC’s portfolio performance, credit administration, compliance with loan program requirements, and SBA operations management. 13 […]
When a SBA loan is in liquidation status, lenders and authorized CDC liquidators are required to perform “Prudent Liquidation.” This means that lenders and authorized CDC liquidators must liquidate and conduct debt collection litigation in a “prompt, cost-effective and commercially reasonable manner, consistent with prudent lending standards, and in accordance […]
If a borrower defaults on a SBA loan, the lender or CDC must assess the environmental risk of contamination before conducting any liquidation action that could result in a loss, or otherwise increase the risk of loss, due to the actual or alleged presence of contamination. Lenders and CDCs assess […]
If the borrower is unable to pay the full amount owed on an SBA loan after all of the collateral has been liquidated, the borrower may submit an “offer in compromise.” An offer in comprise allows borrowers to settle their debt on the SBA loan for less than the full […]
When underwriting and servicing SBA loans, it is important for lenders and CDCs to ensure appropriate insurance coverages are in place to protect the collateral. The SBA does require some types of insurance coverages to be in place on all loans. However, it is the responsibility of lenders and CDCs […]
In traditional lending and loan servicing, it is commonplace for loans to be assumed, assigned, or sold. Most lenders are likely familiar with these servicing actions, and many lenders have their own requirements and procedures for handling each of them. However, when servicing a Small Business Association (“SBA”) loan, lenders […]
The first half of this series evaluated options available to lenders prior to instituting a commercial foreclosure action. The second-half of this series has evaluated available options to lenders during the pendency of the foreclosure action. Since there are additional considerations for lenders dealing with lending to hotels, restaurants and […]
In the event a borrower is seriously delinquent on making payments under a SBA loan, or the SBA loan is classified in liquidation status, lenders and CDCs must develop a prudent and commercially reasonable strategy to maximize their recovery on the loan. Before liquidating any collateral or incurring costs of […]
When a small business association (“SBA”) loan is converted to liquidation status, the lender must begin liquidating the collateral. Lenders must liquidate all personal property that has a Recoverable Value over $5,000. If the Recoverable Value is over $5,000, the lender must decide which method of liquidation is the most […]
When a small business association (“SBA”) loan is converted to liquidation status, the lender must begin liquidating the collateral. Lenders must liquidate all personal property that has a Recoverable Value over $5,000. If the Recoverable Value is over $5,000, the lender must decide which method of liquidation is the most […]