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Notes

13 C.F.R. §§ 120.430–120.435

6 sections in range

§120.430. What conveyances are covered by §§ 120.430 through 120.435?

13 C.F.R. § 120.430

Sections 120.430 through 120.435 cover all other transactions in which a Lender sells, sells a participating interest in, or pledges an SBA guaranteed loan other than for the purpose of securitizing and other than conveyances covered under Subpart F, Secondary Market, of this part.
Notes, amendments, and revision history

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

§120.431. Which Lenders may sell, sell participations in, or pledge 7(a) loans?

13 C.F.R. § 120.431

All Lenders may sell, sell participations in, or pledge 7(a) loans in accordance with this subpart.
Notes, amendments, and revision history

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

§120.432. Under what circumstances does this subpart permit sales of, or sales of participating interests in, 7(a) loans?

13 C.F.R. § 120.432

(a)
A Lender may sell all of its interest in a 7(a) loan to another Lender operating under a current Loan Guarantee Agreement (SBA Form 750) (“participating Lender”), with SBA's prior written consent, which SBA may withhold in its sole discretion. A Lender may not sell any of its interest in a 7(a) loan to a nonparticipating Lender. The purchasing Lender must take possession of the promissory note and other loan documents, and service the sold 7(a) loan. The purchasing Lender purchases the loan subject to SBA's existing rights including its right to deny liability on its guarantee as provided in § 120.524. After purchase, the purchased loan will be subject to the purchasing Lender's Loan Guarantee Agreement. This paragraph (a) applies to all 7(a) loans purchased from any Federal or state banking regulator, any receiver, or any conservator, unless SBA agrees otherwise in writing. This paragraph (a) applies to all 7(a) loans purchased from any Federal or state banking regulator, any receiver, or any conservator, unless SBA agrees otherwise in writing.
(b)
A Lender may sell, or sell a participating interest in, a part of a 7(a) loan to another participating Lender. If the Lender retains ownership of a part of the unguaranteed portion of the loan equal to at least 10 percent of the outstanding principal balance of the loan, the Lender must give SBA prior written notice of the transaction, and the Lender must continue to hold the note and service the loan. If a Lender retains ownership of a part of the unguaranteed portion of the loan equal to less than 10 percent of the outstanding principal balance of the loan, the Lender must obtain SBA's prior written consent to the transaction, which consent SBA may withhold in its sole discretion. The Lender must continue to hold the note and other loan documents, and service the loan unless SBA otherwise agrees in its sole discretion.
(c)
For purposes of determining the percentage of ownership a Lender has retained, SBA will not consider a Lender to be the owner of the part of a loan in which it has sold a participating interest.
Notes, amendments, and revision history

Amendments

[64 FR 6509, 6510, Feb. 10, 1999, as amended at 85 FR 7648, Feb. 10, 2020; 85 FR 80588, Dec. 14, 2020; 87 FR 38909, June 30, 2022]

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

Amendments

[64 FR 6509, 6510, Feb. 10, 1999, as amended at 85 FR 7648, Feb. 10, 2020; 85 FR 80588, Dec. 14, 2020; 87 FR 38909, June 30, 2022]

§120.433. What are SBA's other requirements for sales and sales of participating interests?

13 C.F.R. § 120.433

SBA requires the following:
(a)
The Lender must be in good standing with SBA as defined in § 120.420(f) and determined by SBA in its discretion;
(b)
The Lender has satisfactory SBA performance, as determined by SBA in its discretion. The Lender's Risk Rating, among other factors, will be considered in determining satisfactory SBA performance. Other factors may include, but are not limited to, review/examination assessments, historical performance measures (like default rate, purchase rate and loss rate), loan volume to the extent that it impacts performance measures, and other performance related measurements and information (such as contribution toward SBA mission); and
(c)
In transactions requiring SBA's consent, all documentation must be satisfactory to SBA, including, if SBA determines it to be necessary, a multi-party agreement.
Notes, amendments, and revision history

Amendments

[64 FR 6507, Feb. 10, 1999, as amended at 73 FR 75511, Dec. 11, 2008; 82 FR 39503, Aug. 21, 2017]

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

Amendments

[64 FR 6507, Feb. 10, 1999, as amended at 73 FR 75511, Dec. 11, 2008; 82 FR 39503, Aug. 21, 2017]

§120.434. What are SBA's requirements for loan pledges?

13 C.F.R. § 120.434

(a)
Except as set forth in § 120.435, SBA must give its prior written consent to all pledges of any portion of a 7(a) loan, which consent SBA may withhold in its sole discretion;
(b)
The Lender must be in good standing with SBA as defined in § 120.420(f) and determined by SBA in its discretion;
(c)
The Lender has satisfactory SBA performance, as determined by SBA in its discretion. The Lender's Risk Rating, among other factors, will be considered in determining satisfactory SBA performance. Other factors may include, but are not limited to, review/examination assessments, historical performance measures (like default rate, purchase rate and loss rate), loan volume to the extent that it impacts performance measures, and other performance related measurements and information (such as contribution toward SBA mission);
(d)
All loan documents must be satisfactory to SBA and must include a multi-party agreement among SBA, Lender, the pledgee, FTA and such other parties as SBA determines are necessary;
(e)
The Lender must use the proceeds of the loan secured by the 7(a) loans only for financing 7(a) loans and for costs and expenses directly connected with the borrowing for which the loans are pledged;
(f)
The Lender must remain the servicer of the loans and retain possession of all loan documents other than the original promissory notes;
(g)
The Lender must deposit the original promissory notes at the FTA; and
(h)
The Lender must retain an economic interest in and the ultimate risk of loss on the unguaranteed portion of the loans.
Notes, amendments, and revision history

Amendments

[64 FR 6507, Feb. 10, 1999, as amended at 73 FR 75511, Dec. 11, 2008; 82 FR 39503, Aug. 21, 2017]

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

Amendments

[64 FR 6507, Feb. 10, 1999, as amended at 73 FR 75511, Dec. 11, 2008; 82 FR 39503, Aug. 21, 2017]

§120.435. Which loan pledges do not require notice to or consent by SBA?

13 C.F.R. § 120.435

(a)
Notwithstanding the provisions of § 120.434(e), 7(a) loans may be pledged for the following purposes without notice to or consent by SBA:
(1)
Treasury tax and loan accounts;
(2)
The deposit of public funds;
(3)
Uninvested trust funds;
(4)
Borrowings from a Federal Reserve Bank; or
(5)
Advances by a Federal Home Loan Bank.
(b)
For purposes of the Paycheck Protection Program (PPP), the other provisions of § 120.434 shall also not apply to PPP loans pledged under paragraph (a)(4) or (5) of this section.
Notes, amendments, and revision history

Amendments

[85 FR 21752, Apr. 20, 2020]

Source

Source: Sections 120.430 through 120.435 appear at 64 FR 6509, 6510, Feb. 10, 1999, unless otherwise noted.

Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

Amendments

[85 FR 21752, Apr. 20, 2020]