504 CSA Servicing Updates in Electronic Lending - Servicing (ETRAN)

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2 504 CSA Servicing Updates in Electronic Lending - Servicing (ETRAN) U.S. Small Business Administration Office of Capital Access March 2018

3 Overview CSA Migration to CAFS SBA and the 504 Central Servicing Agent (CSA) have engaged in an effort to migrate CSA systems to the Capital Access Financial System (CAFS) within SBA s technology environment. The decision to migrate CSA systems was made in order to (1) provide SBA greater control of information technology requirements across loan program systems and (2) to continue SBA s long-term goal of consolidating previously outsourced loan program systems within their technology environment. Short-Term Impact Fewer points of entry for key data points CSA reviews at Funding (Disbursement) will allow for improved data quality Increased data security as all CSA data is now housed within CAFS Long-Term Impact Modernized processes will begin to take shape across the loan lifecycle with the centralized data store solution Time saved as communication for servicing actions with CSA is phased out 3

4 Overview CSA Servicing Actions in ETRAN Effective 2/26, CDCs must begin using CAFS to kick off servicing actions with the CSA. CDC users need access to ETRAN within CAFS in order to update funding loans and to request certain servicing actions with the CSA. What servicing actions will move to ETRAN? Funding Alerts during funding disbursement process Borrower name, operating company name, and statement name updates Borrower and operating company address updates Third party lender bank wire information updates Borrower ACH information updates 4

5 Loan Cancellation Prior to Disbursement 5

6 Loan Cancellation CDCs now have the authority to cancel 504 loans prior to disbursement within ETRAN. In order to cancel a loan in ETRAN: On top bar of loan page, select Cancel Select Yes following the Cancel SBA Loan Guaranty prompt Confirm status is Fully Cancelled 6

7 Loan Cancellation 7

8 Loan Cancellation 8

9 Loan Cancellation 9

10 Funding (Disbursement) - Updates 10

11 Funding (Disbursement) Actions There will be three types of Funding Alerts that require action by CDCs: Paper form only correction ETRAN only correction Paper form and ETRAN correction 11

12 Funding (Disbursement) Paper Form Corrections Examples The Debenture lists an incorrect First Payment Date. ACH Form does not have the Periodically as such amounts become due, without further authorization (standing authorization) box checked. The Note date is missing on page 3 of the SAA. Typos on documents including Maturity Dates, Funding Dates, and SBA Guarantee Fee. Signature Date is missing on page 6 of SAA. Corrective Action No updates will be made to ETRAN. Paper form updates are made by CDC and ed or mailed overnight to CSA. Mailed updates would include signature pages of the SAA/Debenture or Third Party Lender Fee checks. 12

13 Funding (Disbursement) ETRAN Corrections Examples CSA advises via Funding Alert that the Operating Company listed on ETRAN does not match the SAA that was received. Upon review, CDC determines that the SAA is correct and there is an error on ETRAN. CDC must update the Operating Company name on ETRAN and reply back to CSA s that they have updated the Operating Company name on ETRAN. CSA would review and accept the changes. CSA finds a discrepancy in the Third Party Lender wiring instructions or ACH information on ETRAN versus the documents received. Upon the CDC s review, they find that the documents are correct and make the necessary updates on ETRAN. CDC must advise CSA of which fields they have updated on ETRAN. CSA would review and accept the changes. Corrective Action CDC makes update on ETRAN and updates CSA via . Without notification, CSA has no way of telling if updates have been made to ETRAN. 13

14 Funding (Disbursement) Paper Form & ETRAN Corrections Examples CSA sends a Funding Alert stating that the Borrower ACH or Third Party Lender ABA/Routing number provided is invalid. CDC would then update the Borrower ACH or Third Party Lender ABA/Routing number field on ETRAN and reply to the advising the update has been made and attach corrected SAA wiring instructions page. Corrective Action CDC makes update on ETRAN and must notify the CSA via . If a hard copy document is required, the CDC must send the document via overnight mail. Otherwise, the CDC must include the form in the notification . Without notification, CSA has no way of telling if updates have been made to ETRAN. 14

15 Interim Lender Wire Information Updates CDCs may update interim lender bank wire information prior to the Pricing Date. In order to request these updates, CDCs must update the following ETRAN fields and an updated page 4 of the SAA. 15

16 Interim Lender Wire Information Updates Bank Wiring Info - The Wire Transfer Instructions on page 4 of the SAA must match the Wire Transfer info under the Third Party Lenders section above. 16

17 Interim Lender Wire Information Updates Bank Wiring Info - The Wire Transfer Instructions on page 4 of the SAA must match the Wire Transfer info under the Third Party Lenders section above. 17

18 Servicing Updates 18

19 Profile Information Updates CDCs may update the Statement Name or change the Borrower and Operating Company information prior to the Pricing Date and as a servicing action post- Funding (disbursement). In order to request these updates prior to Funding (disbursement), CDCs must update the correct ETRAN field and SBA504CSA@wellsfargo.com an updated page 1 of the SAA. IMPORTANT NOTE: The W-9 TIN submitted to the CSA must relate to the Primary Borrower unless the W-9 is submitted as a Sole Proprietor. 19

20 Name Updates Statement Name Statement Name - The Loan Name within the Loan Info section of ETRAN must match the Statement Name on page 1 of the SAA. 20

21 Add a New Borrower or Operating Company Borrower Names - This Primary Borrower must match the Borrower Name field on page 1 of the SAA. The Operating Company must only be listed on the SAA if there is an Operating Company designated on ETRAN. This field shown above should match the Operating Company Name on the SAA. 21

22 Add a New Borrower or Operating Company Borrower Names - This Primary Borrower must match the Borrower Name field on page 1 of the SAA. The Operating Company must only be listed on the SAA if there is an Operating Company designated on ETRAN. This field shown above should match the Operating Company Name on the SAA. 22

23 EPC/OC Updates CDCs are now able to update Eligible Passive Company (EPC)/Operating Company (OC) information on the Loan Info tab of ETRAN. 1 2 If a loan is structured as an EPC, CDCs must select Yes to the question Loan Structured with Eligible Passive Company? on the Loan Info tab on ETRAN. CDC must update each borrower/guarantor as an EPC, OC, or None on the screen. The most common validation error during the March 2018 funding cycle related to EPC/OC structure. If a loan is structured with an EPC, there must be a corresponding OC; otherwise, the CDC will receive a validation error at the top of the submission page. 23

24 EPC/OC Updates EPC/OC - Loans structured with an Eligible Passive Company must also have a corresponding Operating Company. Structure must be detailed on the Loan Info tab of the loan record on ETRAN. 24

25 Address Information Updates CDCs may update address information prior to the Pricing Date and as a servicing action post-funding (disbursement). If the update occurs prior to the Pricing Date, CDCs must update the correct ETRAN field and SBA504CSA@wellsfargo.com an updated page 1 of the SAA. If the update occurs as a servicing action, CDCs must simply SBA504CSA@wellsfargo.com a notice of the update. 25

26 Updated Address Change Process 1 2 CDCs must make updates to the Borrower, Operating Company, and W-9 addresses on ETRAN. CDCs must include an updated page 1 of the SAA and updated W-9 in an notification to SBA504CSA@wellsfargo.com. The most common address-related issue is multiple addresses being listed. Because mail, such as 1098 forms and Residual Due to Borrower checks (funding), is systematically sent to the address entered in CSA s system, the CSA receives return mail when multiple addresses are listed. Accepted: 123 Spruce Street, Units 1-3 Rejected: 101, 103, & 205 Spruce Street 26

27 Address Updates Borrower Borrower Address - The Borrower Mailing Address on the SAA must match the mailing address shown above that is found under the Primary Borrower section 27 on the left panel of ETRAN.

28 Address Updates Operating Company Operating Company Address - The Operating Company Mailing Address on the SAA must match the mailing address under the Operating Company section on the left panel of ETRAN. 28

29 Borrower ACH Information Updates CDCs may update Borrower ACH information prior to the Pricing Date and as a servicing action post-funding (disbursement). Regardless of whether the update occurs prior to Funding (disbursement) or as a servicing action, CDCs must update the correct ETRAN fields and SBA504CSA@wellsfargo.com an updated Authorization Agreement for Pre-Authorized Payment (Debit) form. 29

30 Updated Borrower ACH Change Process On the left panel of ETRAN, the user will click on the Borrower name listed under Borrowers. User will make updates to the following fields in the box next to Disbursement ACH : Bank Name, Account Name, Routing Number, Account Number, Account Type. After clicking Save at the bottom of the page, the user will see a message in the Disbursement ACH field stating Bank information is in the pending status. Regardless of whether the update occurs prior to Funding (disbursement) or as a servicing action, CDC must send an to the CSA requesting an ACH change, which month the change should be effective, and attach the Authorization Agreement for Pre- Authorized Payment (Debit) form and a voided check (optional). This is the same as the current process. CSA will review the request and work with the CDC if information is incomplete or incorrect. CSA will reply to the request advising whether it has been approved/declined. If declined, the CDC must resubmit the request within ETRAN and/or update the attachment. * There will be no changes to the cut-off deadline of the 15th business day of the month. 30

31 Borrower ACH Information Updates ACH Information - The ACH Bank information submitted on the ACH form and voided check (optional) must match the Bank Information under the Primary Borrower section on the left panel. 31

32 General Information 32

33 Validation Errors SBA s ETRAN system will provide validation errors to users who have inputted incorrect or incomplete information. This error is not a technology problem instead, the errors are meant to provide the user with information about the incorrect or incomplete input. Validation errors will detail the field(s) that need to be updated before the information on the screen is saved. CDCs must address the fields that are causing the validation error before information will be saved and updated for the CSA to process. 33

34 General Information Contacting CSA General Mailing Address: PricewaterhouseCoopers Sector LLP c/o Wells Fargo Bank, N.A. Corporate Trust Services 9062 Old Annapolis Road Columbia, MD Attn: 504 Central Servicing Agent Toll Free Number: 1 (855) Address (Participant Questions): sba504csa@wellsfargo.com CLS Address (Website Questions): cls@sba.gov 34

35 General Information W-9 Update The IRS has revised the Request for Taxpayer Identification Number and Certification (IRS Form W-9) in November CDCs and SBA District Counsels can immediately begin using the revised Form W-9 as part of the Debenture closing documents. The CSA will no longer accept older versions of Form W-9 after the May 24, 2018 CSA Cut-Off Date. 35

36 Questions? 36

37 Appendix Most Common Funding Alert Issues Debenture & Note Terms on SAA page 3 Debenture Date is always the Funding Date Note Date should match the date listed on page 1 of the Note (signed date of SAA should also match this date or fall after) Address discrepancies on SAA page 1 and W-9 Form Multiple addresses provided for Borrower or Operating Company or discrepancies in addresses that should match Ongoing SBA Guarantee Fee incorrect on page 5 of SAA SBA Fee should be based off of the SBA Approval Date Tax Identification Number discrepancies on W-9 Form Social Security Numbers acceptable for Individuals, Single-Member LLCs, and Trusts Employer Identification Number required for all other tax classifications First Payment Date and Semi-Annual Dates on Debenture page 1 First Payment Date is the first day of the month 6 months after the funding date Semi-Annual Dates are calendar funding month and 6 months from funding month 37