Once the abdicating lender has confirmed that the transferring lender is ready to transfer, the next step will be for the transferee lender to review the loan file, in particular with regard to the initial use of the proceeds, the adequacy and analysis of the credit, the priority of any pledge rights and whether the loan was properly concluded and properly served; Careful. In essence, the abdicating lender should independently verify whether the SBA guarantee exists and whether he is otherwise satisfied with the status of the loan. Lenders should verify the SOP 50 10 in effect at the time of the granting of the credit to ensure that the applicable requirements of the credit program have been met, including those relating to assessments, environmental studies and Form SBA 912 (Personnel History Statement). The purchase lender should at the same time document its analysis in its internal credit memorandum. Where the loan has been sold on the secondary market, the transferring lender and the abdating lender should inform the Tax Transfer Agent (ESTV) as soon as the transfer has been approved by the SBA. If the lender is satisfied with the credit report, the next step is to obtain authorization from the SBA for the transfer. The transfer of a lender`s shares in a 7(a) loan may not be made without the prior written consent of the SBA. SBA authorization is requested by filing the SBA Transfer of Participation Agreement with the SBA Loan Service Center. This form identifies the loan to be transferred, is signed by both the adherent lender and the abdicating lender, and requires a narrative for certain questions, including: Admittedly, this article is not intended as a comprehensive checklist for thinking about SBA 7(a) loan transfers, but is intended to provide a basic framework for transactions and implications for lenders that will be analyzed by the transfer of credit. Alternatively, the assigning lender and the abdating lender may execute an assignment and acquisition agreement prior to the filing of the assignment agreement. When the parties choose this order, they should ensure that the assignment and takeover agreement contains a provision stipulating that the transfer of the loan must be submitted to the SBA for written approval.
Has the borrower requested the transfer? Was the credit sold on the secondary market? What is the purpose of the transmission? How does the transfer benefit the borrower? Increasingly, lenders have told us that the SBA has strongly considered refinancing an existing SBA 7(a) loan with a new 7(a) loan. As a result, financial institutions experienced an increase of 7 (a) credits granted by one lender (the “transferring lender”) to another lender (the “abdicating lender”). There are a number of reasons why lenders might make such a transaction, such as for example. B the desire of the acquiring lender to acquire a larger share of a customer relationship or to obtain a desired priority pledge. Below are some things to keep in mind as you navigate the 7(a) credit transfer process. The first step for any lender considering taking over an existing 7(a) loan is to confirm that the transferring lender authorizes the transfer. A 7(a) lender cannot be compelled to assign its interest on a loan, even if the borrower requests the transfer….