Commercial Loan Service Center

All unilateral servicing actions must be submitted to SBA. Please refer to the Servicing and Liquidations CDC Matrix for further details.

Certified Development Companies (CDCs) are expected to submit unilateral servicing actions to the Commercial Loan Service Center (CLSC). The PCLP/CDC Unilateral Action Notification  or the ALP/CDC Unilateral Action Notification may be used for this purpose. 

For all servicing actions, CDCs must document the justification for their decision and retain these and all supporting documents in their file for future SBA review to determine if the actions taken by the CDC were prudent, commercially reasonable, and complied with all loan program requirements. It is recommended that the CDC retain a copy of the matrix in effect at the time of the request and attach it to the action in their file.

CDCs are reminded that any action taken by the CDC that confers a preference or engages them in an activity that creates a conflict of interest requires prior written consent from the SBA. As defined in 13 CFR § 120.10, preference is any arrangement giving a CDC a preferred position compared to SBA relating to the making, servicing, or liquidation of a business loan with respect to such matters as repayment, collateral, guarantees, control, maintenance of a compensating balance, purchase of a Certificate of Deposit or acceptance of a separate or companion loan.

CDCs should submit servicing requests to the CLSC.

Your servicing request may require all or a portion of the following items:

• A statement of the proposed action and abrief description of what makes the request necessary
• Status of the SBA loan (date and amount funded, current balance, and status)
• Identification of guarantors or co-makers and a statement as to whether their consent has been or will be obtained for the action
• A summary and analysis of the business, including analysis of financial statements
• Before and after collateral analysis, for actions that affect the collateral
• Summary of prior servicing experience with the borrower such as loan modifications or problems pertinent to the request
• A summary of the impact or benefit of the action on the business
• A statement addressing how the proposed action addresses the needs or solves the problems of the business
• A statement addressing how action protects the interest of the CDC and SBA
• SBA requires all CDCs to prepare legal documents for SBA signature
• PCLP CDCs may use power of attorney for all assumption and subordination agreements
• A copy of the loan authorization and all amendments

Additional guidance can be found in SOP 50 55, Chapter 6. For those CDC actions requiring SBA approval, the following documents may be submitted in order to facilitate review.

• PCLP/CDC Unilateral Action Notification
• ALP/CDC Unilateral Action Notification
• Power of Attorney Agreement
• 504 Servicing Assumption Agreements
• 504 Servicing Subordination Agreements

If you have any questions, please feel free to check out SOP 50 55, Chapter 6, or contact the Commercial Loan Service Center:

CLSC – Fresno

Commercial Loan Service Center – Fresno
801 R St., Suite 101
Fresno, CA 93721

FSC.servicing@sba.gov
Phone: 800-347-0922

Submit documents:

CLSC – Fresno Servicing (box.com)

Lenders are required to notify the Commercial Loan Service Center (CLSC) by reporting the loan in liquidation status on the 1502 Report or updating the status in E-Tran Servicing.

Please refer to SBA’s liquidation SOP 50-57 for general guidance. Generally, unless SBA agrees in writing, the borrower must be in payment default more than 60 calendar days.

For loans approved prior to May 14, 2007, the lender must liquidate all collateral and all cost-effective means of recovery must be exhausted unless the remaining principal balance of the loan is $50,000 or less; or the loan involves prolonged litigation or other circumstances that will extend the liquidation process more than 90 calendar days past the earliest date that the Lender could request guaranty purchase.

For loans approved on or after May 14, 2007, unless the borrower has filed for bankruptcy, the Lender must complete all prudent and commercially reasonable efforts to liquidate the business personal property collateral with an aggregate Recoverable Value of $5,000 or more.

To request that SBA honor its guaranty on any loan approved under the 7(a) loan program, please submit the Universal Purchase Package to the appropriate Center:

• Universal Purchase Package (UPP)
• Universal Purchase Package (UPP) – Accessible
• Borrowing Base Certificate TOA Tool

If the loan is ready for charge off, a lender may submit their request for reimbursement by submitting Care and Preservation of Collateral (CPC) Tabs and supporting documentation to the appropriate center listed below.

Also, if legal fees exceed $10,000 or are non-routine, lenders must obtain pre-approval. If the loan is not ready for charge off, Care and Preservation of Collateral (CPC) Tabs should be submitted with SBA Charge-Off Tabs and Wrap-Up Reports.

Lenders only need to obtain pre-approval for litigation expenses exceeding $10,000 or litigation that is non-routine. Refer to SOP 50 57-2, Chapter 21 and also Litigation Plan for 7(a) Loans.

If the litigation expenses are routine and less than $10,000 and the loan is ready for charge off, lender may submit their request for reimbursement by submitting Care and Preservation of Collateral (CPC) Tabs and supporting documentation the to the appropriate center listed below. If the loan is not ready for charge off, Care and Preservation of Collateral (CPC) Tabs should be submitted with SBA Charge-Off Tabs and Wrap-Up Reports.

To electronically submit your UPP, use the Box.com link.

Commercial Loan Service Center – Fresno
801 R St., Suite 101
Fresno, CA 93721
Attn: Express Purchase Unit

FSC.purchasing@sba.gov
Phone: 800-347-0922

Submit documents:

CLSC – Fresno Purchasing (box.com)

The CDC should request the debenture purchase and classification of the loan into liquidation status when:

• The loan is 60 or more days past due with no prospect of a deferment or a workout. Based on a review of current financial statements, determine if a deferment or a workout that falls within regular 504 loan servicing guidelines will assist the business. This type of action will be referred to the center servicing department for review and processing. For a workout that requires extension of the maturity date, or other changes that do not fall within regular 504 loan servicing guidelines, SBA must be notified to purchase the debenture and classify the loan in liquidation status.
• The third-party lender or other senior lien holder has initiated foreclosure proceedings
• A bankruptcy, or other legal action, which will adversely affect repayment of the 504 loan, has been initiated

SBA has devised a single form, the CDC SBA-serviced Loans Quarterly Status Report, to report on two CDC requirements:

Pre-debenture purchase

All CDCs must submit a written update, using the link above, relative to collection activity by the CDC on each loan in its portfolio that is 60 days or more past due until the debenture is purchased.

Post-debenture purchase

For loans made under the PCLP authority of the CDC, or if the CDC is a designated ACL, a status report must be submitted to SBA within 15 days after debenture purchase, and every 90 days thereafter, using the link above. The report must include a written update relative to the CDC’s liquidation activity.

A site visit must be completed with a site visit report being submitted to SBA within 15 days of the loan being placed in liquidation status.

A site visit should determine whether a workout is feasible by:

• Identifying the collateral available for liquidation
• Establishing the collateral’s recoverable value
• Determining whether the borrower is behind on the rent and whether a liquidation sale of the personal property collateral can be held on-site
• Determining whether any real property collateral is occupied by a person other than the borrower
• Developing a liquidation strategy
• Assessing any environmental risk associated with the anticipated method of liquidation
• Arranging for the care and preservation of the collateral pending liquidation

The CDC must provide information relative to the status of the third-party lender’s loan:

• The loan balance, including principal, interest, default interest, late fees, and prepayment penalty
• Indication if the loan is in default
• If a foreclosure action is imminent 

Legal notices

The CDC must forward, via email, to the Commercial Loan Service Center (CLSC), copies of all default, foreclosure and bankruptcy notices filed by the third-party lender.

A 504 Liquidation Plan should be prepared after a site visit has been conducted and before any significant action is taken to liquidate the loan.

Liquidation plans should be completed and submitted to SBA within 30 days after the purchase of the debenture.

Release of collateral to facilitate a short sale; release of redemption rights; and other requests by the CDC for an action to be taken must be submitted via email, and include all appropriate supporting documentation as outlined in SOP 50 55, Chapter 6 and Chapter 8.

Please consult the current Servicing and Liquidation Actions CDC Matrix for actions that may be taken under the unilateral authority of the CDC.

Protective Bid Analysis (Exhibit A) must be prepared based on an appraised value that is current to 120 days prior to the action for which it will be used.

• Calculate the net equity
• Determine if there are any additional mitigating circumstances either indicated by the appraiser or noted in the site visit
• Based on the above factors, determine if it’s in the agency’s best interest to enter a bid at the foreclosure sale

Please note that an appraisal prepared for the third-party lender and shared with the SBA does not meet program requirements.

In the event the protective bid analysis indicates sufficient net equity in the collateral to consider entering protective bid at the third-party lender foreclosure sale, the NAICS code must be determined.

If the NAICS Code for the loan is on the list of environmentally sensitive industries, a Phase I and reliance letter must be submitted for SBA review. For all other loans, at a minimum, an environmental questionnaire must be completed. Refer to SOP 50 55, Chapter 5 for additional information on Environmental Risk Assessment.

SBA will reimburse the CDC for recoverable expenses related to the liquidation of the loan subject to:

• CDC-CPC Reimbursement Request must be submitted electronically
• A separate request must be submitted for each individual loan
• Recoverable expenses can only be submitted when the aggregate total is $5,000 or more, or in any amount when submitted with the final wrap-up report at the conclusion of all liquidation
• Copies of invoices and other supporting documentation must be included
• Requests may be submitted with the Wrap-up Report, regardless of dollar amount

Pursuant to SOP 50 55, Ch. 3(C)(1), ACLs and PCLP CDCs, “are responsible for conducting all litigation needed to ensure recovery on all of the 504 Loans in their portfolios—including charged-off loans that have not been referred to Treasury.” (See, also, 13 CFR 120.975(a).) CDCs must have either in-house counsel or a contract with outside counsel for the performance of debt collection litigation, as approved by SBA. (13 CFR 120.975(c).) CDCs must submit a 504 Litigation Plan to the CLSC for SBA’s written approval prior to initiating non-routine litigation. (13 CFR 120.540(c)). For all other litigative matters, the Center works in conjunction with District Counsel to monitor cases and take appropriate actions.

If a deficiency exists after all collateral has been liquidated, obligors who are unable to pay the remaining balance in full, may be able to settle their liability on the SBA loan for less than the full amount due. OIC Tabs are required to be submitted to facilitate in the review. Refer to SOP 50 55, Chapter 23 for additional information.

504 Liquidation Wrap-Up report is to be submitted to SBA by the CDC within 90 days of completing all reasonable and cost-effective recovery efforts.

• Protective Bid Analysis (Exhibit A)
• 504 Litigation Plan
• 504 Liquidation Plan
• 504 Liquidation Wrap Up Report
• CDC SBA-serviced Loans Quarterly Status Report
• CDC-CPC and Lit Reimbursement
• Draft Legal Fee Review
• 504 Debenture Purchase Request
• SBA Charge-Off Tabs/Wrap-Up Report

Please refer to SOP 50 55 to learn more about the 504 loan program, or feel free to contact the appropriate Commercial Loan Service Center. 

Commercial Loan Service Center – Fresno
801 R St., Suite 101
Fresno, CA 93721

FSC.504Liquidations@sba.gov
Phone: 800-347-0922

Submit documents:

CLSC – Fresno 504Liq (box.com)

An SBA Form 1150 – Offer in Compromise (OIC) and either SBA Form 770 (Financial Statement of Debtor) or a business financial statement are required for every person or entity wishing to be compromised.

Use of OIC Tabs is a requirement which allows for quicker processing of requests and helps to ensure that all necessary information is included.

7(a) Lenders must resolve SBA-purchased loans as outlined below and provide sufficient evidence of resolution as determined by SBA to the CLSC within either 24 months of purchase by SBA or 24 months after the effective date of SOP 50 57 2 for loans where lenders are actively liquidating, whichever is longer, unless an extension is approved in writing by SBA prior to the expiration of the applicable 24-month period.

Sufficient evidence of resolution includes the following:

Returned to regular servicing 
Lenders must provide SBA with the relevant terms of the agreement under which the borrower has agreed to the resumption of regular payments as appropriate evidence of resolution. The lender must provide this information in writing.

Paid in full 
Lenders must remit SBA’s pro-rata share of the net proceeds sufficient to satisfy the debt owed on the SBA-purchased loan and verify that the loan is classified as “paid in full” in E-Tran as appropriate evidence of resolution.

Wrap-up
Lenders must submit a wrap-up report acceptable to SBA and demonstrating completion of all prudent liquidation as sufficient evidence of resolution. Refer to SOP 50 57 2 Chapter 26, Paragraph B for more information on the contents of the wrap-up report.

Extension of the 24-month prudent liquidation deadline relating to SBA-purchased loans may be granted by SBA on a case-by-case basis if an extenuating circumstance, such as a judicial foreclosure or a bankruptcy proceeding, prevents compliance with that deadline by the lender. Extensions must be granted in writing.

The lender must submit a written request for an extension to the 24-month prudent liquidation deadline to the CLSC as soon as it becomes apparent that an extenuating circumstance will prevent compliance with the deadline, but any such request should be submitted no later than 30 calendar days prior to the expiration of any deadline. At a minimum, the request must include:

• A detailed description of the extenuating circumstance preventing timely liquidation
• Supporting documentation evidencing the extenuating circumstances
• A reasonable estimate of when the prudent liquidation will be complete on the SBA purchased loan
• A status report must be submitted with the request for extension (refer to SOP 50 57 2, Chapter 3, Paragraph F)

SBA will review the request and provide a written response granting or denying the extension and, if granted, will provide a new deadline for prudent liquidation. Once an extension has been granted, lenders must continue to submit a report to SBA every 6 months. Refer to SOP 50 57 2, Chapter 3, Paragraph F.

If the extenuating circumstance provided for in the extension request ceases to exist, the Lender must promptly notify SBA and provide a wrap-up report within 30 calendar days

A Lender must comply with the new prudent liquidation deadline unless a further extension is granted in writing by SBA prior to the expiration of the existing deadline

Prudent liquidation email:

Fresno: FRSC.2YearExceptions@sba.gov

For loans which SBA has purchased from the secondary market, lenders must provide the CLSC with a written status report within 15 business days after receiving notice that SBA purchased its guaranty from the secondary market. (13 C.F.R. § 120.520)

In addition, for all loans SBA has purchased, either from the secondary market or directly from the lender, lenders must provide the CLSC with a written status report every 6 months, starting within 6 months from the date of guaranty purchase, until the lender has provided evidence sufficient to SBA that the loan is resolved (i.e. returned to regular servicing, paid in full, charged-off). Refer to SOP 50 57 2, Chapter 23, paragraph I, for the deadline for lender resolution of an SBA-Purchased Loan.

The status report on each loan must include, at a minimum, the following:

• Borrower status
• Obligors
• Collateral
• REO and acquired personal property collateral
• Workout or restructuring negotiations
• Recoveries and expenses incurred
• Liquidation activities and litigation proceedings
• Reasons preventing the resolution of the SBA loan
• Timelines as to when the lender’s resolution activities are expected to be completed

Lenders must prepare and submit a wrap-up report in electronic format to the CLSC for review and approval within 30 calendar days after prudent liquidation is complete or upon receipt of a request from SBA, whichever occurs first. Once approved by SBA, the remaining loan balance, if any, will be charged-off by SBA and all eligible parties of the loans will be referred to U.S. Department of the Treasury for further collection efforts after assignment of the appropriate loan documents by lender to SBA; further collection efforts may include administrative wage garnishment by Treasury.

A wrap-up report template is available at SBA Charge Off Tabs/Wrap-Up Report.

• SBA Form 1150 — Offer in Compromise
• SBA Form 770 — Financial Statement of Debtor
• Offer in Compromise (OIC) 8-Tab Kit
• SBA Charge Off Tabs/Wrap-up Report
• CDC-CPC Reimbursement Request

Please refer to SOP 50 57 or email the post-servicing inbox.

Commercial Loan Service Center – Fresno
801 R St., Suite 101
Fresno, CA 93721

FSC.PostServicing@sba.gov
Phone: 800-347-0922

Submit documents:

CLSC – Fresno Post Servicing (box.com)