Common Errors Made In 1502 Reports

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2 Common Errors Made In 1502 Reports NAGGL SBA Lending Technical Conference Christopher Anthony BNY Mellon, Colson Services Kelly Isley banc-serv PARTNERS May 3 rd and 4 th, 2016

3 By The Numbers 6 Month Reporting Period: October 2015 March 2016 Average Volume Percent of Active Portfolio Active Loans 274, % 1502s Received Monthly 6,600 86% Electronic 82% STP 23% Checks Reported Lines of Data 318, % SOP calls for electronic data submission and wire payment method Lenders may also ACH Credit using the same instructions Electronic data submission should be via the web or through MS Excel and ASCII Comma Delimited supported formats Unreported Loans 8, % Loans Reported With 6, % Errors Loans With Open Errors 4, % 3

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5 Sin gle, adj., one only Access the 1502 Dashboard ( ) with Colson Single Sign-On credentials 1502 Dashboard should be the singular method for lenders to correct 1502 Lender Remittance Exceptions One hundred percent reported Call , Call Option 1 for questions about SBA Form 1502 reporting or SBA s Ongoing Servicing Fee 5

6 1502 Dashboard Reporting Summary View 6

7 1502 Dashboard Loan Level History 7

8 1502 Dashboard Loan Level Edit 8

9 1502 Dashboard e-file Submission Create 1502 e-file Map non-conforming Lender 1502 files to mandatory OMB SBA Form 1502 format This step is not necessary if using Colson s Fee Calculator the following Colson representatives for setup assistance: Kathy-Anne Spence-Nelson: spencek@colsonservices.com Osarys Rodriguez: rodriguezo@colsonservices.com o@colsonser ices com Angel Suarez: suareza@colsonservices.com Upload 1502 e-file Browse and select the file you would like to upload Option to select multiple worksheets for processing Ability to view uploaded file for format exceptions prior to submission Verification of file Grand Total ($) Safe and secure submission method to replace non-stp secure s Note: Colson accepts Transport Layer Security (TLS) transmissions as another secure alternative 9

10 Top 5 FTA Lender Exceptions (Monthly Avg or Max Loan Count > 1,000) FTA Code (SBA Code) Description Condition Action Steps 13 (1011) This is a courtesy message that SBA's System shows this loan as Cancelled, Paid-in-Full, Charged Off or Sold in Asset Sale. Cancelled loans may be due to the expiration of SBA's guaranty. Discontinue reporting if the loan is no longer active. If the loan is active, contact your SBA Servicing Center. 21 (1048) SBA will not update this record since SBA's System shows this loan as Approval Fully Undisbursed. If the loan is Fully Undisbursed, please report a Guaranty Service Status Code 9; otherwise an Amount Disbursed this Period on Total Loan must be provided. SBA s database indicates that the loan guaranty is no longer active. Lender reported loan as Current, Past Due or Deferred. However, SBA s System still shows the loan as Approval Fully Undisbursed. If the guaranty is inactive, remove loan from future 1502 reports If the guaranty should still be active, contact the SBA center to potentially reinstate the loan Note Volume is increased due to common lender practice to continue to report on loans until this confirmation code is generated If the loan is Fully Undisbursed, report a Status Code 9 and provide the gross loan approval amount as the Amount Undisbursed on Total Loan If the loan has been disbursed, d report the loan disbursement for the Amount Disbursed This Period on Total Loan 10

11 Top 5 FTA Lender Exceptions (Monthly Avg or Max Loan Count > 1,000) FTA Code (SBA Code) Description Condition Action Steps 17 (1030) This is a warning message that Guaranteed Portion Principal was not reported and the Guaranteed Portion Closing Balance was reduced from the last balance accepted by SBA. Please provide the Guaranteed Portion Principal to reduce the closing balance or if the reported closing balance is unchanged from the prior 1502 report, access SBA E-Tran Servicing/1502 Info to review loan rejection errors (ERR) triggered by prior reporting that prevented the loan The total outstanding loan balance < ETRAN loan balance and Guaranteed Portion Principal = $0.00. Possible causes: Guaranteed Portion Principal was not reported Incorrect Guaranteed Portion Closing Balance reported P i 1502 reporting rejected on SBA CAFS due to errors (Err) balance to update. Prior 1502 Report the correct Guaranteed Portion Principal Report the correct Guaranteed Portion Closing Balance Review ETRAN s E-Lend Servicing/1502 Info to avoid reporting errors (Err) that prevented previous balance(s) from being accepted Note: SBA Code 1030 is a Warning message (Warn). ETRAN will accept record if there are no Err records. 11

12 Top 5 FTA Lender Exceptions (Monthly Avg or Max Loan Count > 1,000) FTA Code (SBA Code) Description Condition Action Steps 14 (1042) SBA's System will not update for subject loan. Outstanding balance plus amount undisbursed exceeds the net approval for loan. Please ensure the closing balance reported is for the guaranteed portion of the loan. 2 (1035) SBA's System will not update subject loan. Guaranteed Portion Closing Balance must be greater than zero. The total outstanding loan balance + amount undisbursed > SBA s gross approval amount The Guaranteed Portion Closing Balance = $0.00 Report the correct Guaranteed Portion Closing Balance Report the correct Amount Undisbursed on Total Loan Verify ETRAN matches lender records for SBA Guaranty Percentage and Approval Amount Report the correct Guaranteed Portion Closing Balance on every line of 1502 reporting Report Status Code 6 if the loan is Paid In Full Report Status Code 9 with the gross approval amount as the Amount Undisbursed on Total Loan if the loan has never been disbursed Verify the loan is classified as a line of credit on ETRAN if reporting a temporary pay down to $

13 Status Code 5 In Liquidation Reporting Status Code 5 updates a loan to In Liquidation Disbursed status Removing Status Code 5 from your report DOES NOT remove a loan from In Liquidation Disbursed status FTA Exception Code # 16 SBA s status shows loan in liquidation. Must report loan with a Status Code 5. Monthly Average: 671 loans (7th) Occurrences may increase mid-reporting cycle if loan is placed into In Liquidation Disbursed status via ETRAN 13

14 SBA s Ongoing Servicing enacted by Congress in

15 Zero or No Payment Received on an Unsold Loan SOP 50 10: if no payment was received, compute the fee based on the product of a monthly on-going fee factor times the last reported Guaranteed Portion oto Closing Cos Balance. This ongoing fee factor is either one twelfth of the annual service fee, or a daily fee factor times the number of days in a reporting month. Select 1502 Field Examples Borrower Payment on April 1 st No Borrower Payment on May 1st Borrower Payment on June 1 st GP Number Next Installment Due Date Guaranteed Portion Interest t Guaranteed Portion Principal 5/1/2016 5/1/2016 7/1/2016 $$ 0.00 $$$$ $$$ 0.00 $$$ Total To FTA $ $ $ Interest From 3/1/2016 4/1/2016 Interest To 4/1/2016 4/1/2016 6/1/2016 #ofdays Calendar Basis Act/365 Act/365 Act/365 Guaranteed Portion $$$,$$$ $$$,$$$ (same as $$$,$$$ (less Closing Balance Month-end April) Guaranteed Portion Principal) 15

16 Zero Balance Reporting Revolving Loans Temporarily Paid to Zero Do not report Status 6 (Paid in Full) or Status Code 9 (Fully Undisbursed) when the borrower temporarily pays the line balance to $0.00. Leave Status blank. FTA Exception Code # 20 This is a courtesy message that the SBA guaranty will no longer exist on this loan, as it has been reported Paid-in-Full. If reported Paid-in-Full in error, please verify the loan status on SBA ETRAN s E-Lend Servicing and contact the appropriate SBA Servicing Center to possibly reinstate the loan, as necessary. > Monthly Average: 718 loans (6th) Do not add principal repayments back to the Amount Undisbursed reported on the SOP 50 10: [Revolving loans - once the first disbursement takes place, the loan must not be reported as Status Code 9 again, as long as the loan is outstanding, even in instances where the full amount of the credit line is repaid by the Borrower. Do not restore any balance to the Undisbursed Amount once loan disbursements have begun.] 16

17 Zero Balance Reporting Paid In Full Loans (Status Code 6) Do Report: Status Code 6 when the loan is paid in full by the borrower (guaranty will no longer be active) Correct Guaranteed Portion Principal Ongoing g Servicing Fee for unsold loans Do Not Report: Next Installment Due Date with a Status Code 6 Status Code 6 when the loan has been transferred to another lender. Report Status Code 7 Interest To date as of the payoff date Guaranteed Portion Closing Balance of $

18 1502 Forms are due at the FTA on the third calendar day of the month, or the next business day if the third is not a business day. The SBA allows a grace period of two business days after the due date. Two calculations for the SBA Ongoing Servicing Fee: For term loans, SBA's basis point fee calculation: [Guaranteed Portion Opening Balance] x [fee rate] [Calendar Basis] x [# of days] For revolving loans or term loans with multiple disbursements, SBA's basis point fee calculation: [Guaranteed Portion Interest Amount] x [fee rate] [Note Rate] Bi an nu al, adj., occurring twice or two times a year 1502 online user re-certifications are initiated mid-january and mid- July each year 18

19 Two calculations performed by FTA for loan currency (Status Codes 1, 2 and 3) Term Loans: > Primary: Interest To date > Secondary: Next Installment Due Date (only in absence of Primary) FTA Error Code # 9: SBA's System may not reflect the correct Guaranty Service Status Code for this loan. Interest-To-Date must be provided and must be a valid date. o Monthly Average: 637 loans (8th) Revolving Loans and ARC Loans: > Primary : Next Installment Due Date > Secondary: Interest To date (only in absence of Primary) May 2016 (Monthend April 2016) Reporting Calculation Status Codes Interest To Date April 2016 March 2016 <= February 2016 Next Installment Due Date May 2016 April 2016 <= March

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