Servicing Update: SOP 50 55, Chapter 6 & Chapter 8 Overview. Mount Whitney Room Tuesday, June 17, :00 pm 4:00 pm

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1 Servicing Update: SOP 50 55, Chapter 6 & Chapter 8 Overview Mount Whitney Room Tuesday, June 17, :00 pm 4:00 pm

2 Thank you to our Alliance Partners Fresno, CA June 17-18

3 Speakers Ray Kulina, Assistant Center Director for Servicing U.S. Small Business Administration Moderator: Sandy Mortan, First Vice President New Jersey Business Finance Corporation Fresno, CA June 17-18

4 SBA Servicing Best Practices Ray Kulina, Assistant Center Director

5 Best Practices = Save Time and $ Lets go over the following: Get your request right and you can reap SBA turn time rewards and this will save you $$$ (and time). How to request a servicing action - Make it clear and concise SOP CH 6 and CH 8 Servicing Requests. Know these chapter s and you can t go wrong

6 How to request a Servicing Action How to request a servicing action Have your submittal be clear and concise 1.) Provide your credit memo do your analysis 2.) Status of the TPL loan - balances 3.) Address the collateral value (appraisals) 4.) Your credit analysis should cover all financial statements, so no need to submit. 5.) Your submittal should address clearly the condition of the business and other factors important to your request. 6.) Don t forget to include a word copy of your document that needs SBA approval looking to do one pass SOP Loan Servicing Chapter 6

7 SOP CH 6 Servicing Requests Hot Topics FOLLOW THE SOP GUIDELINES -Review and analysis of the credit How SBA looks at it - Make your determination if the request is properly supported - Have the back up documents saved FTR s, PFS, etc., for SBA review if needed. - Appraisals (See CH 2 of SOP (pay attention to recoverable value) SOP REFERENCE CH 6 1, a, page 55 Follow this guidance with your submittal and you can t go wrong This reference has 8 line items and if you follow these with your request it makes the approval easy Let s strive for one-pass submittals

8 SOP CH 8 Modification of Collateral Hot Topics Subordination of Lien No cash out - easy (TPL Balance to meet SOP requirements) Cash out - Appraisal/credit Analysis Guarantor releases Can t jeopardize the loan recovery Loans must be seasoned Sale of operating Company: = Exception to policy Condemnation Proceeds: =Analyzed per CH 6 Partial Releases collateral impact and business impact General Requirements: Must meet servicing and eligibility guidelines Credit Analysis required Should/Must be seasoned Good credit history Sufficient Equity - Appraisal Ability to repay Subordinations to specific amounts

9 SOP Page 55 Here is your Key to approval. 1. Required Documentation Requests for approval of a proposed Loan Action should be in the form of a clearly and concisely written letter (or other document) based on an internal credit memorandum. Both the letter and the credit memorandum must be independent of any document or analysis prepared by a senior lienholder or any other Person with a conflict of interest. Although SBA reserves the right to request additional information, the letter should generally include:

10 Here is the helpful processing list Straight from the SOP! (1) A brief description of the proposed Loan Action; (2) The amount funded, date of funding, current balance and status of the loan; (3) The current financial condition of the Borrower; (4) The justification for the proposed Loan Action, i.e., benefit to the Borrower, CDC and SBA neither abundance nor lack of collateral alone is sufficient justification for a Loan Action; (5) Whether the proposed Loan Action will increase the risk of loss, and if so, any mitigating factor, e.g., the value of SBA's collateral will be increased, or the Borrower's business performance will be improved; (6) If the proposed Loan Action will impact the collateral, a summary of prior Loan Actions impacting the collateral and an analysis of the Recoverable Value of the collateral both before and after the proposed Loan Action; (7) A summary of prior servicing experience with the Borrower, i.e., loan modifications or problems pertinent to the request; and (8) A list of the Obligors and a statement as to whether their consent has been or will be obtained for the proposed Loan Action

11 Put it together A complete request can = approval Written Request that is concise Your Credit memo that supports the request Documents prepared and submitted with word. Strive to do one pass on the request.

12 Do these things and you will have the Key to SBA approval by following the SOP Guidance

13 General Information-Links When submitting a request, make sure you receive a response that we have your action!!! Electronic Loan Files: We store all files and s Useful Links: (General Directory) seful-links#: (Guidance and Forms) s: Want to know more about SBA's Center in Fresno? Come see us at... aprograms/elending/clc/index.ht ml Please direct ALL servicing inquiries and actions to FSC.Servicing@sba.gov Hint: Goggle SBA Fresno

14 Wednesday, June 18: What s Up Next SBA Servicing Center Roundtable and Q & A Session Sierra Grand Ballroom Tours of the SBA Servicing Center and Networking Event Meet the Bus at the Hotel Main Entrance Fresno, CA June 17-18