SBA Loan Servicing Support

A key component of the SBA’s mission is the provision of lending support. Loan servicing support focuses on managing an SBA-guaranteed loan for financial institutions in compliance with the lender’s internal policies and standards set by the SBA loan servicing support (SBA). Managing an SBA loan is complex, and a failure to adhere to the rules can have serious ramifications. Professional guidance helps ensure that borrowers remain compliant and provides strategies designed to minimize the potential for foreclosure or default.

For example, a common servicing misstep is releasing collateral without SBA approval (when required) or modifying credits inappropriately. Lenders should always refer to SBA’s Servicing and Liquidation Actions 7(a) Lender Matrix before making any changes to a credit.

SBA Loan Servicing Support: Ensuring Smooth Loan Management

SBA 7(a) Working Capital* and 504 Fixed Asset loans offer a flexible source of funding that can be used for a variety of purposes including new construction, expansion or renovation of existing facilities; equipment, fixtures or leasehold improvements; operating capital; debt refinance for compelling reasons; seasonal line of credit or inventory; or to start a business.

Typically, a lender will check personal and/or business credit to make sure the borrower is credit worthy. For example, many loans use a FICO SBSS score that evaluates data from both owner and business credit.

SBA loan servicers are also responsible for billing the borrowers, collecting and processing principal and interest payments throughout the life of the loan, forwarding the funds to an investor in the secondary market and performing monthly 1502 reporting. In exchange for these responsibilities, the financial institution pays a servicing fee. The responsibilities of the servicer are defined in a 1086 agreement.…