SBA Guaranty Purchase

The Universal Purchase Package is the collection of documents and information submitted to the SBA when a lender requests purchase of the guaranteed portion of a defaulted SBA loan. The package gives the SBA the information it needs to review the loan from origination through servicing and liquidation and determine whether the guaranty is eligible for purchase.

The purchase review brings years of lending activity into focus at one time. The SBA may review underwriting, eligibility, closing, servicing, collateral, liquidation efforts, and compliance with applicable SBA Loan Program Requirements. A complete, organized, and well-supported package can help streamline the review process and address potential issues before submission.

Our firm helps SBA lenders review loan files and prepare Universal Purchase Packages with the SBA’s requirements in mind. We can identify potential documentation or compliance concerns, assist with organizing the supporting record, and help lenders prepare a clear and complete submission for SBA review.

An Offer in Compromise is a potential resolution available in connection with certain defaulted SBA loans when an obligor offers to settle their remaining liability for less than the full amount owed. The process requires careful evaluation of the obligor’s financial condition, collection prospects, collateral, and the applicable SBA requirements before an offer is submitted for consideration.

An Offer in Compromise can provide a practical path toward resolving outstanding obligations when full recovery is unlikely. For SBA lenders, properly evaluating and documenting the proposed compromise is important because the lender’s collection efforts and handling of the request may become part of the SBA’s review of the loan.

Our firm assists SBA lenders in evaluating Offers in Compromise, reviewing supporting financial information, and preparing the documentation needed for submission to the SBA. We help lenders assess the proposed resolution within the applicable SBA requirements and present a well-supported request for the agency’s consideration.

A Wrap-Up Report documents the completion of liquidation activities on a defaulted SBA loan. It provides an accounting of the lender’s liquidation and recovery efforts, including collections, expenses, collateral dispositions, and other actions taken to resolve the loan. SBA requirements call for wrap-up reporting at the completion of liquidation.

The Wrap-Up Report is an important final step in closing out a liquidated SBA loan and documenting the ultimate loss. Accurate reporting and supporting documentation help demonstrate the lender’s liquidation efforts and substantiate expenses and recoveries. Timing can also be significant because SBA regulations establish deadlines associated with completing liquidation and requesting guaranty purchase.

Our firm helps lenders prepare and review Wrap-Up Reports, organize supporting documentation, and address issues that may arise as liquidation concludes. We also help lenders coordinate the timing of liquidation, wrap-up reporting, and guaranty purchase requirements so the file is complete and ready for SBA review

During the guaranty purchase process, the SBA reviews the lender’s file for compliance with applicable Loan Program Requirements. If the review identifies a deficiency that affected the SBA’s exposure or resulted in a loss, the SBA may reduce the guaranty purchase through a repair or, in certain circumstances, deny all or part of the purchase request. Potential issues may involve loan origination, closing, lien perfection, use of proceeds, servicing, liquidation, documentation, or other program requirements.

Understanding the reason for a proposed repair or denial allows a lender to evaluate the underlying file, determine what documentation is available, and provide the SBA with a complete and accurate response. Thorough documentation is particularly important because SBA regulations require lenders to maintain records demonstrating compliance with the Loan Program Requirements applicable when actions were taken.

Our firm helps lenders understand the deficiencies identified by the SBA and evaluate the relevant facts, documentation, and Loan Program Requirements. We assist lenders in reviewing the agency’s findings, gathering supporting information, and preparing clear, well-supported responses that provide the SBA with the information necessary to complete its review.

Guaranty purchase does not necessarily mark the end of a lender’s responsibilities on an SBA loan. After the SBA purchases the guaranteed portion, lenders may continue to have servicing, liquidation, collection, reporting, recordkeeping, and remittance responsibilities under the applicable SBA Loan Program Requirements.

Continued compliance after purchase is important because the SBA may review the lender’s handling of the loan even after the guaranty has been honored. The SBA’s regulations provide mechanisms for recovering amounts previously paid under a guaranty when circumstances warrant, making appropriate post-purchase administration and documentation an important part of managing the file.

Our firm helps SBA lenders understand their continuing responsibilities following guaranty purchase and navigate issues that arise as a loan moves through final liquidation and resolution. We assist with post-purchase servicing and liquidation questions, documentation and reporting requirements, and other matters needed to bring the SBA loan file to an appropriate conclusion.