Tip of the Week

SBA Guaranty Purchase Recovery

As a sign of the times, this area of SBA lending is getting a lot of press these days.  For years, many of us didn’t often deal with the back end or if we did, it was through somebody in “workouts”.  Given all the changes at the Agency, in the industry, and of course in the economy – dealing with guaranty purchases (collecting on your guarantee when the deal is dead) is a mix of art and science (similar to loan originations when you think about it).

Here are a few tips we’ve gleaned from our work in this area:

•  Follow the prescribed SBA system for demanding payment.
  •  If it’s a 7(a) loan, use the 10-tab system and send your deal to Herndon.
  • If it’s an Express loan, send it to one of the two servicing centers for your region (Fresno or Little Rock). Currently you need to use their 22-tab system. SBA just announced though that they are planning a streamlined 10-tab system for Express loans (hopefully by the end of the fiscal year, September 30)
  • If it’s a 504 loan, follow the CDC's lead to coordinate a debenture purchase through one of te two servicing centers.  Purchase is required before any liquidation actions can be taken. 
  • If you have companion loans, consult loanresolutions@sba.gov for guidance. Ultimate purchase logisitics will be handled by the responsible center, but SBA may designate a lead purchase center to communicate and negotiate the gist of the deal with you.
• Give SBA everything they request in each of the relative tabs because they can’t make a decision without complete information. Think about loans on the front end, without complete information, you really can’t make a good credit and business decision, can you? Same thing is true here.
• Make sure to "tell the story" of the loan when submitting the guaranty purchase request so that SBA doesn't have to guess what happened from time of origination to time of business failure.  By providing concise, but complete information at the beginning of the process, this will avoid the "back and forth" with SBA in getting clarity around the deal.
• If you can’t find something (or reasonably and honestly recreate it), then face facts, fess up with cards on the table with SBA. You’ll all be a lot better off in the long run. The truth is always best.
• Have conviction. If the first answer you get isn’t agreeable, plant your feet and stand your ground.  With appropriate assertiveness, discuss (argue) your case based on facts, not emotion. If you’re right, you should get paid.
• Be concise, complete, accurate, timely and above all – honest. Folks at Herndon, Little Rock and Fresno want to pay you if they can (frankly it’s easier than a repair or denial). If you’re easy to do business with, they should be easier to do business with.  It just stands to reason.

 Here’s a quote from a leading motivational speaker that seems to fit this topic.  Enjoy.

With integrity you have nothing to fear,

since you have nothing to hide. With integrity

you will do the right thing, so you will have no guilt.

With fear and guilt removed you are

free to be and do your best.         Zig Ziglar

Take the right approach.

Brian Burke and Karen McHugh

740 E. Campbell Road, Suite 900 | Richardson, TX 75081 | (214) 507-7710 | (214) 507-7720
kmchugh@sbaAccess.com | bburke@sbaAccess.com | www.sbaAccess.com