SBA Lending Matters Newsletter
A Word from Arne

With 2014 having drawn to a close, I want to thank our clients and associates for your continued support and patronage. All of us here at Holtmeyer & Monson appreciate your loyalty, and we look forward to serving you in the coming years.

The past year was very successful for the SBA, but occasionally I come across an article questioning the relevance of the Small Business Administration. Recently, I took part in a panel discussion about this very issue, and I can report that under the outstanding leadership of Administrator Maria Contreras-Sweet, the SBA is determined to be relevant in the highly competitive commercial lending space. During the last fiscal year ending 09-30-14, the SBA supported about $28 billion of commercial credit. Such loans facilitate small business access to credit that many conventional lenders won’t touch. The borrowers include retail service firms, start- ups, and business owners hoping to make acquisitions, among others. Additionally, the SBA is fully committed to streamlining its credit-granting process through innovative technology improvements. It’s also important to remember that the SBA is one of the few federal agencies that operate with zero subsidies from taxpayers. The assessment of user fees to SBA 7a borrowers and lenders eliminates the need for an extra tax burden. So, is the SBA relevant? Not only is the agency relevant, it’s the fuel that drives the engine of the U.S. economy.

As always, please call upon us here at Holtmeyer & Monson with any SBA related question or issue you may have. We can eliminate the myths and set the record straight about SBA lending – and the tremendously valuable benefits it offers your bank and your borrowers.

Featured Article

Best Practices: Clarification of Credit Bureau Reporting SOP 50 57 – 7(a) Loan Servicing and Liquidation
By: Kristen G. Dickey
http://www.starfieldsmith.com

The SBA recently published Information Notice 5000-1330 which became effective on December 15, 2014. This Information Notice seeks to clarify SOP 50 57 7(a) Loan Servicing and Liquidation, Chapter 3, Paragraph F. 2 regarding credit bureau reporting with respect to 7(a) loans, which states:

In accordance with the Debt Collections Improvement Act of 1996, Lenders are required to report information to the appropriate credit reporting agencies whenever they extend credit via an SBA loan. Thereafter, they should continue to routinely report information concerning servicing, liquidation, and charge-off activities throughout the life-cycle of the loan.

This Information Notice directs lenders to specific credit reporting references that identify who, where, when, and what to report and provides helpful information to assist lenders with reporting information whenever credit is extended under a federal program such as an SBA-guaranteed loan. These sources include: (1)Debt Collection Improvement Act of 1996; (2) Federal Claims Collection Standards (FCCS), 3 C.F.R. 900-904; (3) OMB Circular A-129; (4); Treasury’s Managing Federal Receivables (MFR); (5) Guide to the Federal Credit Bureau Program (GFCBP); and (6) 31 U.S. C. 3711(e)(4). Note: Each commercial credit reporting agency will have its own requirements, so lenders should contact each agency for applicable requirements.

WHO? Lenders must report borrowers, but not guarantors, of SBA-guaranteed loans to commercial credit reporting facilities.

WHERE? Lenders must submit reports to designated credit reporting agencies for commercial accounts listed in Appendix 3 of the GFCBP.

WHEN? As mentioned above, lenders must report this information whenever credit is extended to a borrower under a federal program. This information should be reported throughout the entire life-cycle of the loan at least on a quarterly basis but possibly more frequent than that if necessary to “maintain the integrity and accuracy of the information being reported.” See GFCBP – Reporting and Account Information

WHAT? Lenders should: (1) identify the borrower by name, address, and taxpayer identification number; (2) provide the amount, status, and history of the debit; (3) identify the agency or program under which the debt arose; and (4) provide any ongoing information about the extension of credit to the borrower, including servicing, liquidation, and charge-off activities.

For more information regarding credit bureau reporting requirements, please contact Kristen at 407-618-0698 or [email protected].


Regulatory Corner

Complimentary Service to Address New SBA Hot Button
On December 15, 2014, the SBA issued an Information Notice clarifying the requirement that lenders extending credit via an SBA loan must routinely report information about the loan to appropriate credit reporting agencies throughout the loan’s lifecycle. Largely ignored by lenders for many years, this requirement has become a priority for the SBA and is a “hot button” item in SBA Lender Reviews. As required by the SOP, credit reporting flows through the commercial credit reporting agencies and not through the SBA.

As a service to our clients (at no charge), we have established a relationship with a credit reporting agency that will fulfill the SBA requirements and help to keep the process from becoming onerous and cumbersome for lenders. Business Credit Reports, a Nashville-based business credit reporting agency, has been transacting credit reporting for SBA lenders nationwide since 1989 by serving as a liaison between SBA lenders and the business credit reporting agencies such as Experian, Equifax, or Dun & Bradstreet. Business Credit Reports is highly regarded in the industry, and we became affiliated after proper due diligence. Debbie Golbach, vice president of business development, for the reporting agency, will assist Holtmeyer & Monson clients in successfully negotiating this SBA requirement. Our clients can contact Debbie directly at 615.989.7005 and I encourage all to take advantage of this valuable resource.

Please call your Holtmeyer & Monson representative for additional details on this issue.

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SBA Hot Topic
A revised Servicing and Liquidation Actions Matrix from SBA (version 10) went into effect 12.29.14. Two significant changes: E-Tran must now be used for certain unilateral actions; also, lenders can change interest on a disbursed loan from a fixed to variable rate. Click HERE for the updated matrix.

 

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