![]() ![]() Lenders who engage in litigation involving SBA loans must adhere to the following requirements: If a payment default does not exist, but an event has occurred which would cause the loan to be placed in liquidation (i.e., bankruptcy filing, business shutdown, or foreclosure by a prior lienholder), a site visit must be done within 15 days of that event. Site visits must be performed within 60 days of an unremedied payment default or sooner if there are assets with significant value that could easily be moved or depleted. SBA requires all lenders to make site visits and prepare a detailed report containing an inventory of remaining assets and an assessment of their condition and value. Quarterly liquidation status reports must be submitted to SBA after purchase. These should be brief but comprehensive and we encourage you to email them to fax to 20. On a monthly basis, all SBA loans are reported on the SBA 1502 report. When the loan is transferred into liquidation status, please remember to change the status code on your monthly 1502 status report to “5” for in-liquidation status. Learn about SBA 1502: Status Reporting Codes. There is a dual reporting requirement on loans in liquidation Servicing and Liquidation Action Matrix.When the lender takes collection action against borrower’s other assets or other assets of principals/guarantors (for example, through salary offset), SBA expects the lender to prudently pursue recovery on both loans. SBA also expects that any recoveries the lender realizes from such action will be divided pro rata (based on the comparative balances outstanding on the two loans) between the SBA-guaranteed loan and the lender’s own loan. SBA also would expect that prudent and reasonable liquidation-related expenses be allocated by lien priority if expenses can be so identified and broken out. However, if not practical, expenses to pursue actions affecting multiple loans can be shared pro rata between both such loans (although SBA would not agree to share in expenses exceeding its pro-rata share of recoveries).įor additional questions or concerns email Helpful Hints Guide If your institution has any non-SBA-guaranteed loans to the borrower or its principals/guarantors, whether those loans are secured by any of the same collateral that secures the SBA-guaranteed loan or not, the lender must not take any action that will confer a preference upon itself in terms of recovery on its own loan as compared to its recovery on the SBA-guaranteed loan. The lender’s recoveries on each such loan against collateral securing both generally will be governed by lien priority, although SBA expects the lender to diligently pursue recovery of both liens. Lender’s non-SBA-guaranteed loans and recoveries obtained on those loans SBA also would expect that prudent and reasonable liquidation-related expenses be allocated by lien priority. Please be mindful that SBA will only recognize other lender priority liens, such as purchase money liens, if the lender has properly perfected and received SBA’s prior written concurrence. If your institution has any non-SBA loans to the borrower or its principals/guarantors, or has liens from any such loans against collateral securing the SBA loan, please be aware that proceeds from sale of collateral should be applied based on relative lien position as required by the SBA Loan Authorization. Pacific Northwest region media contacts.Market research and competitive analysis. ![]()
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