[Federal Register Volume 59, Number 94 (Tuesday, May 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11793]
[[Page Unknown]]
[Federal Register: May 17, 1994]
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SMALL BUSINESS ADMINISTRATION
Business Loans, Secondary Market
AGENCY: Small Business Administration.
ACTION: Revision of SBA Form 1086.
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SUMMARY: On November 23, 1992, (57 FR 54949), the public was asked to
comment on a proposed revision of Small Business Administration (SBA)
Form 1086, Secondary Participation Guaranty Agreement. Very few
comments were received. These have been analyzed and SBA has made
certain changes based thereon. SBA is hereby publishing a revision of
Form 1086.
EFFECTIVE DATE: The revised Form 1086 must be used on any Guaranteed
Interest received by the Fiscal and Transfer Agent on and after (60
days from the date of this publication).
FOR FURTHER INFORMATION CONTACT:
James W. Hammersley (202-205-6493) or Marybeth Kerrigan (202-205-6493).
Suite 8300, Small Business Administration, 409 3rd St. SW, Washington,
DC, 20416.
SUPPLEMENTARY INFORMATION: The Small Business Administration has
prepared a revision of the document (SBA Form 1086) used to execute the
sale of the Guaranteed Interest portion of a 7(a) loan into the
secondary market. The modifications address changes in the market and
are intended to improve program operations. The revision incorporates
several changes that have been suggested by lenders, investors and
broker/dealers.
On November 23, 1992 (57 FR 54949), the public was asked to provide
comments on the proposed revision. Very few comments were received.
These have been analyzed and SBA has made certain changes to the
revision that had been proposed.
The major changes to SBA Form 1086 are these:
1. The ``Date of First Disbursement'' has been added to the Lender
Certifications in Section I.
2. Language incorporating the ``normal'' servicing fee and the
``premium protection fee'' has been implemented.
3. Language incorporating the 40 basis point program fee and the
program user fee equal to 50% of the portion of the sale price in
excess of 110 percent of the principal amount outstanding of the
guaranteed portion has been added.
4. The provision for a split wire settlement has been removed.
During a recent sample period, fewer than 5 percent of settlements used
this facility. It was subject to abuse, including an attempt by an
unregistered broker to wire money to a personal checking account.
5. The premium refund language has been modified to include
borrower prepayments as well as defaults.
6. The grace period for late payments to Colson is changed.
Payments will now be due on the 3rd of the month or the next business
day if the 3rd is not a business day. The grace period will be two
business days after the due date.
Following is the revised SBA Form 1086.
Erskine B. Bowles,
Administrator.
OMB NO. 3245-0185
EXPIRATION DATE: 1/31/97
SBA LOAN NUMBER__________
SECONDARY PARTICIPATION GUARANTY AGREEMENT
IMPORTANT INFORMATION
THIS FORM IS TO BE USED FOR THE INITIAL TRANSFER ONLY. ALL
SUBSEQUENT TRANSFERS MUST USE THE DETACHED ASSIGNMENT SBA FORM 1088.
LOANS SOLD USING SBA FORM 1084 MUST BE CERTIFICATED PRIOR TO RESALE:
USE SBA FORM 1085.
A. LENDER CERTIFICATIONS. The LENDER CERTIFIES, by signing this
document, among other things that: (See paragraphs 3, 10 and 20 of the
Terms and Conditions herein)
(1) Lender, including its officers, directors and employees, has no
knowledge of a default by Borrower and has no knowledge or information
that would indicate the likelihood of a default.
(2) Lender has paid the SBA guaranty fee.
(3) The loan is fully disbursed, and
(4) Lender acknowledges that it has no authority to unilaterally
repurchase the Guaranteed Interest from Registered Holder without the
written consent of the SBA.
B. BORROWER PAYMENTS. Lender shall send to the Fiscal and Transfer
Agent (``FTA'') the FTA share of all Borrower payments received after
settlement of the loan sale. LENDER WILL NOT SEND ANY PAYMENTS DIRECTLY
TO THE REGISTERED HOLDER OR TO THE BROKER/DEALER. Lender will retain a
copy of this Form. Lender will not receive a return copy of this Form
after settlement. The Wire transfer receipt from the settlement through
FTA will be the Lender's notification that the sale is complete.
C. LENDER PAYMENT AND LATE PAYMENT PENALTY. Lender payment and
remittance information (SBA Form 1502) shall be due at FTA on the third
calendar day of every month, or the next business day if the third is
not a business day. On any payment not received in the offices of FTA
by 5 pm Eastern Time on the second business day after the due date, FTA
will, on behalf of SBA, levy a late payment penalty of five percent
(5%) of the amount remitted late, or $100, whichever is greater
(subject to a maximum penalty of $5,000 per month). This penalty will
be paid through FTA along with the late penalty identified in paragraph
6(c) that is due to FTA. (See paragraph 6 of the Terms and Conditions.)
D. PAYMENT MODIFICATIONS. Lender may approve one deferral of
payment for up to three consecutive monthly payments without obtaining
prior permission from Registered Holder. Lender shall immediately
notify FTA and SBA of any deferral. Any other payment modification must
receive prior approval by Registered Holder. Requests for payment
modification must be forwarded to FTA which will forward the proposed
modification to Registered Holder or provide the name of such
Registered Holder to Lender for direct negotiations at Registered
Holder's discretion. (See Paragraph 2 of the Terms and Conditions.)
E. BORROWER PREPAYMENTS. For loans approved by or on behalf of SBA
after February 14, 1985. Lender must give ten (10) business days
advance written notice to FTA to allow time for FTA to request that
Registered Holder return the Certificate. On the date of prepayment.
Lender will wire funds to FTA consisting of principal and accrued
interest through the date immediately preceding the date funds are
wired, plus any penalty or other fees due to FTA. (See Paragraph 15 of
the Terms and Conditions.)
SBA Form 1086 (1-94) Previous editions are obsolete.
F. LENDER REPURCHASES. Unless all conditions in paragraph 20 are
met. Lender may repurchase a loan only on a willing buyer-willing
seller basis. Lender liquidity or a desire to add loans to a portfolio
are not acceptable reasons to pay off a loan at par. (See Paragraphs 3
and 20 of the Terms and Conditions.)
G. PROGRAM FEES. There is a 40 basis point fee collected from all
payments received from lender, which is transmitted to SBA to defray
program expenses. In addition, FTA will withhold from the settlement
transaction one-half of the premium amount in excess of 10% of the loan
balance. This amount is also sent to SBA to defray program expenses and
will not be refunded under any circumstances. (See Section I of the
Terms and Conditions.)
TERMS AND CONDITIONS
The Small Business Administration, an Agency of the United States
Government (``SBA'') and the Lender named below (``Lender'') entered
into a guaranty agreement on SBA Form 750 (``750 Agreement'')
applicable to a loan (``Loan'') made by Lender in participation with
SBA to the Borrower (``Borrower'') named below evidenced by Borrower's
Note and any modifications thereto (``Note'') a copy of which is
attached hereto and incorporated by reference. Lender is the
beneficiary under the 750 Agreement of SBA's guaranty of the specified
percentage of the outstanding balance of the Loan (``Guaranteed
Interest'').
Section I: Borrower Information and Lender Certifications
Lender ________________________________________ Borrower
________________________________________
Address ________________________________________ Address
________________________________________
Zip ____________________ Zip ____________________
Contact Person ________________________________________ Telephone
________________________________________
LENDER CERTIFIES THE FOLLOWING AS OF THE DATE OF LENDER'S
SIGNATURE:
Date of 750 Agreement ________________ Percent of SBA Guaranty
________________
Date of Note ________________ Original Face Amount $________________
SBA Loan Authorization Date ________________ (Date of SBA Form 529B)
Outstanding Principal Amount of Loan $________________
Outstanding Principal Amount of Guaranteed Interest $________________
(This is the ``Par Value'')
THE SBA GUARANTY FEE WAS PAID ON ____________________ [date].
Date of First Disbursement of Loan ____________________ [date].
Date of Final Disbursement of Loan ____________________ [date].
Guaranteed portion has a {time} fixed rate or {time} variable rate
(check one).
Unguaranteed portion has a {time} fixed rate or {time} variable rate
(check one).
Interest is paid to, but not including ____________________ [date].
Interest is calculated on {time} 30/360 or {time} Actual Days/365
(check one) (OTHER METHODS ARE PROHIBITED.)
THIS INTEREST ACCRUAL SHALL BE MAINTAINED FOR THE LIFE OF THE LOAN.
SBA shall retain a program fee equal to \4/10\ of one percent per
year of the guaranteed principal amount outstanding. Such fee shall be
collected by the FTA from all payments received from Lender. FTA shall
transmit such fees to SBA on a regular basis, no less frequently than
monthly.
There shall be a minimum servicing fee required by SBA. This fee
shall be published from time to time in the Federal Register. The
minimum servicing fee as of the date of publication of this form is
0.3% per annum for all loans. There shall also be a minimum premium
protection fee for any Guaranteed Interest sold at a price greater than
Par Value. This fee shall be published from time to time in the Federal
Register. The minimum premium protection fee as of the date of
publication of this form is 0.7% per annum. For any Guaranteed Interest
sold at a price greater than Par Value, the total minimum fees, as of
the date of publication of this form, are 1.0% per annum.
Except for the period between final disbursement and the first
interest adjustment date, lender's total fees must remain constant for
the life of the loan. Lender's total fees, as computed on the unpaid
principal amount of the Guaranteed Interest shall be entered next to
the phrase ``Lender's Permanent Fee'' below. If this Agreement relates
to a variable rate loan, the total fee may be adjusted for the period
from final disbursement to the first adjustment date to conform the
rate to market rates. If such an adjustment is used, enter the initial
fee next to the phrase ``Lender's Initial Fee'' below.
Lender's Permanent Fee ____________________
Lender's Initial Fee* ____________________ (Optional--Variable Rate
Loans Only--If initial fee is different than permanent fee)
*Lender's Initial Fee must conform to the minimum fee
requirements described above.
Price paid for the Guaranteed Interest. (Net of accrued interest.
Otherwise include ALL money and other items of value exchanged.)
Price paid by purchaser: $________________% of Par ________________
SBA shall retain a program user fee equal to 50% of the portion of
the sale price which is in excess of 110 percent of the principal
amount outstanding of the guaranteed portion. Such fee shall be
collected by the FTA and shall be remitted by FTA to SBA on a regular
basis, no less frequently than monthly. SBA will not refund such
program user fee under any circumstances.
CASH FLOW YIELD based upon Constant Prepayment Rate. (Enter both
mortgage and bond equivalent yield.) For a variable rate loan, the
yield should be based upon the current net rate and should be entered
as a spread from the Prime Rate. EXAMPLE: Prime +1% based upon 10%
Prime Rate.
Constant Annual Prepayment Rate assumption ________________% per annum.
Certificate Interest Rate: ____________% [Borrower's Note rate less
applicable fees]
Certificate Cap ____________% Certificate Floor ________________% (if
applicable)
Mortgage Yield: (Fixed Rate Loan) ________________________________%
(Variable Rate Loan) Prime (+/-) __________% based on __________% Prime
Bond Equivalent Yield: (Fixed Rate Loan) ____________________%
(Variable Rate Loan) Prime (+/-) __________% based on __________% Prime
Lender hereby assigns the Guaranteed Interest to Purchaser/
Registered Holder as follows:
Name ________________________________
Address ________________________ Zip code ____________
Contact Person ______________________________ Telephone
______________________________
Under the penalties of perjury, Purchaser/Registered Holder
certifies that its Taxpayer Identification Number is
____________________ and that it is not subject to backup withholding
pursuant to an Internal Revenue Service Notice. Failure to provide a
Taxpayer Identification Number will subject interest earned to backup
withholding.
Registered Holder requests SBA to issue through FTA a Guaranteed
Interest Certificate (``Certificate'') evidencing ownership of the
Guaranteed Interest in the name of Registered Holder (such person or
entity, or any subsequent transferee, during its respective period of
ownership of the Certificate to be called ``Registered Holder''). SBA,
Lender and Registered Holder (for itself and for any subsequent
Registered Holder) agree to the appointment by SBA of FTA to serve as
the agent to transfer Certificates and to receive loan repayments, and
to transmit such payments to the Registered Holder.
A written notification to or demand upon SBA pursuant to this
Agreement shall be made through FTA to:
SBA Servicing Office ______________________________
Address ______________________________
City ____________________ State ____________________ Zip
____________________
SBA Servicing Office Code (Please see attached list of Office Codes
at the end of this document) ____________________
Section II: Lender, Registered Holder and FTA Rights and
Responsibilities
1. Lender's Sale of Guaranteed Interest. Lender has sold the
Guaranteed Interest and acknowledges that it has received value for
that Guaranteed Interest. Lender has given notice and acknowledgment of
the transfer of the Guaranteed Interest by completing the following
legend on the Note:
The guaranteed portion of this Note has been transferred to a
Registered Holder for value.
Dated____________________ (Lender)____________________
Lender has delivered or hereby delivers to FTA a photocopy of the
Note and any modifications thereto with the legend; such photocopy
shall be incorporated into this Agreement. This legend shall serve as
notification for any future transfer of the Guaranteed Interest. The
date of the legend shall be on or before the date of settlement for the
sale of the guaranteed interest.
The photocopy of the note and any modifications thereto must have a
legend stating that the photocopy is a true and certified copy of the
original.
2. Loan Servicing. Lender shall remain obligated under the terms
and conditions of the 750 Agreement, and shall continue to service the
Loan in the manner set forth in the 750 Agreement. Modifications to the
750 Agreement or the Note that do not affect the repayment terms of the
Note may be effected by Lender of SBA without the consent of Registered
Holder (for itself and any subsequent Registered Holder). Lender, at
the request of Borrower, may grant one deferment of Borrower's
scheduled payments for a continuous period not to exceed three (3)
months of past or future installments. Lender shall immediately notify
FTA and the SBA field office in writing of any deferment. The
notification will include (i) the SBA Loan Number, (ii) the Borrower's
name, (iii) the terms of such deferment, (iv) the date Borrower is to
resume payment, and (v) reconfirmation of the basis of interest
calculation (e.g. 30/360 or Actual Days/365). Interest is not waived,
only deferred. Subsequent to the deferment period, payments received
from Borrower will first be applied to accrued interest until such time
as interest is paid to a current status, then to principal and
interest. Registered Holder may not demand repurchase of the Guaranteed
Interest during the deferment period, or before Borrower's failure to
pay the first scheduled installment following the deferment period.
Lender shall not authorize any additional deferment, or any extension
of Loan maturity without the prior written consent of the Registered
Holder.
No change in terms and conditions of repayment of the Note other
than the deferment authorized in this paragraph shall be made by Lender
or SBA without the prior written consent of Registered Holder. A
request for such payment modification must be forwarded by Lender to
FTA. FTA will forward the proposed modification to Registered Holder.
The Registered Holder must respond to the request within thirty (30)
calendar days of the date of the request from FTA. Lack of response
will be construed by Lender and FTA as nonconsent, and appropriate
action under Paragraphs 10, 11 or 20 of this Agreement will be taken.
FTA, at the discretion of Registered Holder, may provide the name of
Registered Holder to Lender for direct negotiation of the modification.
3. Representations and Acknowledgment of Lender. Lender hereby
certifies that the Loan has been made and fully disbursed to Borrower,
and that the full amount of the guaranty fee has been paid to SBA. The
outstanding principal amount of the Guaranteed Interest and date to
which interest is paid as certified by Lender is accepted by SBA and
have been warranted by SBA to the Registered Holder as of the SBA
Warranty Date. The Warranty Date is the date this Agreement is settled
by Lender and Registered Holder through FTA. Lender shall be liable to
SBA for any damage to SBA resulting from any error in (i) the certified
principal amount, (ii) percentage of Guaranteed Interest, and/or (iii)
date to which interest is paid. Lender also represents that as of the
Warranty Date neither it nor any of its directors, officers, employees,
or agents has or should have through the exercise of reasonable
diligence, any actual or constructive knowledge of any default by
Borrower on the Note, or has any information indicating the likelihood
of a default by Borrower or the likelihood of prepayment of the Loan by
Borrower by refinancing or otherwise.
If Borrower makes the first three payments required by the Note
after the Warranty Date in the month in which they are due and the
payments are the full amount required by the Note, the Lender shall
have no liability to refund the premium.
If the borrower prepays the loan for any reason within 90 days of
the Warranty Date, Lender must refund any premium received.
If the borrower fails to make the first three monthly payments due
after the Warranty Date and the borrower enters uncured default within
275 calendar days from the Warranty Date, Lender shall refund any
premium received. Borrower payments must be received by the Lender in
the month in which they are due and must be full payments as defined in
the Borrower's note.
Liability of lender for refund of premium will not be affected by
any deferment granted under Paragraph 2 or other payment modification
granted during the 90 day period.
SBA shall bear no liability for refund or premium. Lender's failure
to refund such premium to Registered Holder may, as determined by SBA,
constitute a significant violation of the Rules and Regulations of the
Secondary Market.
SBA will not refund the program user fee collected from the premium
under any circumstances.
If Lender has repurchased the Guaranteed Interest pursuant to
Paragraph 10 or 20, and if the Borrower subsequently makes installment
payments on the Note in full for a period of twelve (12) consecutive
months. Lender may sell the Guaranteed Interest it has repurchased.
Lender hereby acknowledges that it has no authority pursuant to
this Agreement to unilaterally repurchase the Guaranteed Interest from
Registered Holder at par without the written consent of SBA.
4. Obligations and Representations of Registered Holder. SBA shall
purchase the Guaranteed Interest from Registered Holder pursuant to the
terms of this Agreement regardless of whether SBA has any knowledge of
possible negligence, fraud or misrepresentation by Lender or Borrower,
provided neither Registered Holder nor any person or entity having the
beneficial interest in the Guaranteed Interest participated in, or at
the time it purchased the Guaranteed Interest had knowledge of, such
negligence, fraud or misrepresentation.
Subject to the provisions of 18 U.S.C. Sec. 1001 (relating among
other things to false claims) Registered Holder, and any person or
entity having the beneficial interest therein, hereby warrants that it
was not the Borrower, Lender or an ``Associate'' of Lender, or anyone
standing in the same relationship to Borrower. (``Associate'' is
defined in Title 13, Code of Federal Regulations, Part 120.) Registered
Holder warrants that it had neither participated in nor been aware of
any negligence, fraud or misrepresentation by Lender or Borrower with
respect to the Note or related Loan documentation. Neither execution of
this Agreement by SBA, nor purchase by SBA from Registered Holder shall
constitute any waiver by SBA of any right of recovery against Lender,
Registered Holder, or any other person or entity.
Registered Holder (for itself and each subsequent Registered
Holder) hereby acknowledges that the Loan may be terminated on a date
other than its maturity date. At that time, the Certificate will be
called for redemption, at par, and the Registered Holder must submit an
affidavit attesting to the provisions of this paragraph. The
Certificate will cease to accrue interest as of the date of such
termination, regardless of whether the Certificate is surrendered and
the affidavit is received.
5. Issuance of Guaranteed Interest Certificate. SBA, Lender and
Registered Holder (for itself and each subsequent Registered Holder)
agree that ownership of the Guaranteed Interest shall be evidenced by a
Certificate to be issued by SBA. SBA shall issue such Certificate by
designating and authorizing such issuance by FTA, or through its own
facilities.
FTA shall be the custodian of the executed original of this
Agreement. The Agreement shall be delivered to FTA immediately after
execution by Lender and Registered Holder. Each Registered Holder shall
receive the Certificate described herein. Registered Holder may obtain
from FTA a copy of the executed Agreement pertaining to the Guaranteed
Interest represented by the Certificate upon payment of a reproduction
fee.
Upon execution of this Agreement and delivery to FTA, FTA shall
issue to Registered Holder (or to Registered Holder's assignee if FTA
is provided written information on a timely basis) the Certificate
evidencing the ownership of the Guaranteed Interest in the Loan. If
Registered Holder is not the person or entity having the beneficial
interest in the Certificate, Registered Holder hereby represents that
it has obtained authorization from such holder of beneficial interest
appointing Registered Holder as agent for such person or entity with
respect to all transactions arising out of the respective obligations
under this Agreement.
The Certificate shall identify the Guaranteed Interest and shall
state, among other things: (i) Name of Registered Holder, (ii) the
Principal Amount of Guaranteed Interest as of the Warranty Date, (iii)
the Certificate Interest Rate, and (iv) the Borrower's Payment Date.
Transfer of the Guaranteed Interest by Registered Holder may be
effected by the transferee: (i) obtaining from the transferor the
executed Detached Assignment and Disclosure Form (SBA Form 1088), (ii)
presenting the Certificate and executed Detached Assignment and
Disclosure Form to FTA for registration of transfer and issuance of a
new Certificate, (iii) paying to FTA a Certificate issuance fee set
from time to time by SBA, and (iv) presenting to FTA the exact spelling
of the name in which the new Certificate is to be issued, complete
address and tax identification number of the new Registered Holder,
name and telephone number of the person handling the transfer, and
complete instructions for delivery of the new Certificate.
6. Obligations of Lender.
(a) FTS must receive from Lender by the third calendar day of every
months, or the next business day thereafter if the third is not a
business day, (``FTA Due Date'') the FTS's share of all sums Lender
received from Borrower as regularly scheduled payments during the
proceeding month. By the same date, Lender shall provide the following
information on Mandatory Remittance Form (SBA Form 1502), (or an exact
facsimile format), with respect to each Loan which Lender has sold to a
Registered Holder and which is registered with the FTA. Lender
acknowledges that ``each Loan'' mans all loans registered with the FTA
regardless of which version of SBA Form 1086 or 1085 was executed at
the time of sale of transfer. SEE PAYMENT CALCULATION EXAMPLE ATTACHED
TO THIS AGREEMENT.
1. The SBA Loan Number
2. The Alpha abbreviation for the SBA field office
3. The Note interest rate (or rates if the interest rate on a
variable rate loan changed during the payment period)
4. The interest amount due to the FTA
5. The principal amount due the FTA
6. The total amount due the FTA for the particular Loan
7. The time period covered by the interest rate(s) in Item 3
8. The number of days in the interest period
9. The calendar basis (30/360 or Actual Days/365)
10. The closing principal balance for the Loan
11. A grand total for Items 4, 5 and 6 of all loans sold
12. A late payment penalty (if applicable)
(b) With the exception of prepayments pursuant to Paragraph 15 of
this Agreement, payments received other than as regularly scheduled in
the previous month must be remitted by Lender to FTA within two (2)
business days of receipt of collected funds. Such remittance shall
include the information described in Items 1 to 12 above.
(c) As stated in subparagraph (a) above, Lender remittance is due
to FTA by the FTA Due Date. POSTMARKS ARE NOT CONSIDERED AS PROOF OF
RECEIPT. THE REQUIREMENT IS RECEIPT BY FTA. If Lender remittance,
including complete payment information as specified is subparagraph (a)
is not received in the office of the FTA by 5 p.m. Eastern Time on the
second business day after the FTA Due Date, Lender shall pay:
(i) a late payment penalty to FTA equal to the interest on the
unremitted amount at the rate provided in the Note, less the rate of
Lender's servicing fee; and
(ii) a late payment penalty to FTA calculated at a rate of twelve
percent (12%) per annum on the unremitted amount; and
(iii) a late payment penalty to SBA (collected by FTA), which is
the greater of $100 or five percent (5%) of the unremitted amount.
There is no limit on the penalty calculated in (i) and (ii) above.
There is a $5,000 per month per reporting unit limit for the penalty
identified in (iii) above. SEE EXAMPLE OF LATE PAYMENT PENALTY
CALCULATION ATTACHED TO THIS AGREEMENT.
If these penalty fees are not included in the remittance, FTA, on
behalf of SBA, shall levy such late payment penalties on Lender.
Failure by Lender to pay such penalty and collection fees within ten
(10) business days of receipt of a bill for such fees may constitute a
significant violation of the Rules and Regulations of the Secondary
Market. FTA and SBA reserve the right to withhold these penalty fees
from settlement of any future Guaranteed Interest sale, or any payment
made by SBA or FTA to Lender.
FTA will retain the penalty and collection fees due FTA and forward
the fee due SBA at the end of the month.
(d) Lender agrees to work with SBA and FTA, at no charge, to
reconcile immediately any Loan in which the interest paid-to-date on
the Lender's books differs from the records of the FTA by three (3)
days or more. Lender agrees to provide a transcript of account within
ten (10) business days of receipt of a request from SBA or FTA. Failure
of Lender to provide a transcript upon request may cause the Lender to
be fined $100 by SBA.
(e) Lender's total fees as computed on the unpaid principal amount
of the Guaranteed Interest for the period of actual services performed
by Lender shall remain as specified in Section I above for the life of
the Loan. These Lender fees are not transferable except to an entity to
which servicing of the loan is assigned under the provisions of the
Form 750 Agreement and SBA Regulations and Standard Operating
Procedures.
(f) Lender agrees to deposit the pro rata share of borrower's
payment due to the FTA in a trust account with the name ``Colson
Services Corp., FTA, in trust for the individual security
beneficiaries.''
7. Obligations of FTA.
(a) FTA shall have the obligation to remit to Registered Holder
payments received pursuant to Paragraph 6 of this Agreement (less
applicable fees and penalties, if any), as follows:
(i) Investor payment date will be the fifteenth of the month or
next business day if the fifteenth is not a business day. Any payment
received by the FTA up to the second business day prior to the investor
payment date will be sent to the investor on the investor payment date.
(ii) Any payment received by FTA on or after the second business
day prior to the investor payment date of the month following
Borrower's scheduled payment will be remitted to Registered Holder with
two (2) business days of receipt of immediately available funds by FTA.
Any late payment penalty received by FTA pursuant to subparagraphs
6(c)(i) and 6(c)(ii) of this Agreement allocated tot he period after
the fifteenth day, or the next business day if the fifteenth is not a
business day, of such following month shall be remitted to the
Registered Holder. The balance of such penalties shall be retained by
FTA.
(iii) Other amounts received from Lender by FTA will be held and
applied as required by this Agreement.
(iv) With the prior written consent of SBA. FTA may offset from
payments due to Registered Holder any prior overpayments made to
Registered Holder.
(b) Prepayments pursuant to Paragraph 15 of this Agreement or full
redemption payments received by FTA from Lender or SBA shall be
remitted by FTA to Registered Holder by wire transfer within two (2)
business days of receipt of immediately available funds by the FTA.
Payment on full redemption of the Certificate will be made only after
presentation of the Certificate to FTA by Registered Holder. FTA shall
retain a final transfer fee upon redemption.
(c) Each remittance by FTA to Register Holder shall be accompanied
by a statement of (i) the amount allocable to interest, (ii) the amount
allocable to principal, and (iii) the remaining principal balance as of
the date on which such allocations were calculated.
(d) If FTA fails to make timely remittance to Registered Holder in
accordance with this Paragraph 7, FTA shall pay to Registered Holder:
(i) interest on the unremitted amount at the rate provided in the Note
less applicable fees, plus (ii) a late payment penalty calculated at a
rate of 12% per annum on the amount of such payment, plus (iii) a fee
of $100 per loan to SBA. The fee identified in (iii) shall be limited
to not more than $50,000 per month.
(e) FTA agrees to identify to Lender each month any Loan in which
the paid-to-date on its books differs by three (3) days or more from
the paid-to-date on the books of Lender, provided the information
required by Paragraph 6(a) has been submitted to FTA by Lender. Such
identified differences will be reconciled on a timely basis.
(f) FTA agrees to issue Certificates within two business days of
settlement or receipt of Form of Detached Assignment.
(g) FTA agrees to acknowledge any request from Registered Holder
for late payment claims within ten (10) business days of receipt.
(h) FTA agrees to forward to Registered Holder, within five (5)
business days of receipt, any servicing request requiring concurrence
of Registered Holder. FTA agrees to forward Registered Holder's
response to Lender within five (5) business days of receipt. If FTA
does not receive a response from Registered Holder within thirty (30)
calendar days from the date of the request. Registered Holder will be
deemed to have submitted a response of nonconsent. FTA is directed to
take appropriate action pursuant to Paragraphs 10, 11 or 20 of this
Agreement.
(i) Where the Guaranteed Interest is a part of a Pool pursuant to
Section 120.700 of the SBA Rules and Regulations as amended, the FTA,
as manager of the pool, will, on behalf of Registered Holder of
Guaranteed Loan Pool Certificates, agree to servicing actions by Lender
that have been approved by SBA that will not affect the rights of the
Certificate Holder.
(j) FTA will provide to each SBA field office, in a format approved
by SBA, on or before the last business day of each month a report of
the execution of Secondary Market Guaranty Agreements (SBA Form 1086)
during the previous month.
(k) FTA agrees to pay accrued interest for any loan which FTA fails
to include in the late payment report described in Paragraph 10(a). FTA
shall be responsible for interest beginning 90 days after the interest
paid to date of the loan and continuing until 30 days after the SBA
field office receives notification of the arrearage.
8. Transferability of Guaranteed Interest. Each Registered Holder
maintains under this Agreement the right to assign the Guaranteed
Interest. Each Registered Holder of the Guaranteed Interest shall be
deemed to have represented that to the best of its knowledge, it has,
and so long as it is a Registered Holder will have, no interest in the
Borrower, the Note or the collateral hypothecated to the Loan, other
than the Guaranteed Interest held under this Agreement. Each Registered
Holder represents that it will not service or attempt to service the
Loan, or secure or attempt to secure additional collateral from
Borrower.
Without the consent of SBA, Lender or FTA. Registered Holder may
transfer the ownership of the Guaranteed Interest to a subsequent
assignee (other than the Borrower, Lender, or an ``Associate'' of the
Lender as defined in Title 13, Code of Federal Regulations, Part 120,
or anyone standing in the same relationship to the Borrower). The
effective date of any transfer of the Guaranteed Interest shall be the
date on which such transfer is registered on the books of FTA. Any
payment or action by FTA or SBA to the transferor Registered Holder
prior to the effective date of the transfer of the Guaranteed Interest
shall be final and fully effective. Neither SBA nor FTA shall have any
further obligation to the transferee Registered Holder with respect to
such payment or action, and any adjustment between the transferor and
transferee resulting from such payment or action by SBA or FTA shall be
the responsibility and obligation solely of the transferor and
transferee.
FTA will make payments on payment date to the person or entity that
on the books of FTA is the Registered Holder as of the close of
business on the Record Date. The Record Date is the last business day
of the prior month. Any other adjustment between transferee and
transferor is their responsibility and obligation. At any given time,
there shall only be one Registered Holder entitled to the benefits of
ownership of the Guaranteed Interest. Upon transfer of the Guaranteed
Interest, the transferor shall cease to have any right in the
Guaranteed Interest or any obligation or commitment under this
Agreement.
FTA shall serve as the central registry of Certificate ownership.
9. Certificates Lost, Destroyed, Stolen, Mutilated or Defaced.
Procedures for claim resulting from loss, theft, destruction,
mutilation or defacement of a Certificate are found in Title 13, Code
of Federal Regulations, Part 120. Upon written request, FTA will
provide such procedures to any claimant.
10. Repurchase of Guaranteed Interest by Lender.
(a) FTA will provide to each SBA field office on or before the last
business day of the month a list of Loans which are in arrears based on
criteria supplied to FTA by SBA.
With five (5) business days of the receipt of the list, the SBA
field office will contact Lender to determine the status of the Loan. A
Loan requires action where (i) Lender's records indicate the interest
paid-to-date is more than (60) days in arrears or (ii) default by
Borrower in payment of any installment of principal and interest has
continued uncured for more than sixty (60) days. SBA will, in
consultation with the Lender, decide on an appropriate remedial action
under Paragraph 2 of this Agreement, or determine whether Lender will
be offered the option to purchase the guaranteed portion. This decision
will be made by SBA within ten (10) business days of the first contact
with Lender.
SBA will notify the FTA in writing of the action to be taken within
five (5) business days of the decision.
Where the decision is for Lender to purchase the Guaranteed
Interest, FTA, at its option, may request a transcript of account from
Lender. Lender agrees to provide the transcript of account within ten
(10) business days of receipt of the request from FTA. Lender's failure
to comply with the request for transcript may result in a $100 penalty
payable to SBA.
FTA and Lender will reconcile the transcript of account within ten
(10) business days of the receipt of the transcript by FTA. If Lender
and FTA cannot agree on the balance and interest paid-to-date within
such ten (10) business days, FTA will immediately send the Lender's and
FTA's transcript to the SBA field office for reconciliation. The
reconciliation by the SBA field office will be final. SBA will notify
Lender and FTA of the reconciliation immediately.
Within ten (10) business days of the reconciliation of the account
of a Loan that the Lender is to repurchase, the Lender will transmit
and FTA will receive ten (10) business days advance written notice of
the date of purchase. Within two (2) business days of receipt of such
notification, FTA will notify Registered Holder of the repurchase date
and request Registered Holder to forward the Certificate to FTA.
On the date of purchase, Lender, without further notification from
FTA, will forward by wire transfer a payment to FTA that includes the
outstanding principal balance of the Guaranteed Interest plus interest
through the date immediately preceding the date of the wire transfer.
(b) Upon receipt of the purchase amount from Lender (or from SBA
pursuant to Paragraph 11 of this Agreement), FTA shall remit to
Registered Holder within two (2) business days the outstanding
principal balance of the Guaranteed Interest plus interest through the
date immediately preceding the date of Lender purchase. FTA may deduct
from such amount a final transfer charge for the final transfer and
redemption of the Certificate. The amount of such final transfer charge
will not exceed the normal transfer charge for certificates.
(c) Upon repurchase of the Guaranteed Interest by Lender, the
rights and obligations of Lender, FTA and SBA shall be governed by the
750 Agreement and any continuing provisions of this Agreement.
11. Purchase by SBA.
(a) Written notices will be given to Lender and FTA when SBA is to
purchase the Guaranteed Interest. Within five (5) business days of such
notice, Lender and FTA will provide a transcript and final statement of
account of the Guaranteed Interest to SBA. Failure by Lender or FTA to
provide the transcript may result in a $100 penalty payable to SBA by
the party failing to comply. SBA will reconcile the transcripts and the
reconciliation will be final.
Within ten (10) business days of final reconciliation of the
account, SBA will provide ten (10) business days advance written notice
to FTA of the date of purchase. FTA, within two (2) business days of
the receipt of the written notice, will notify Registered Holder of the
repurchase date and request Registered Holder to forward the
Certificate to FTA.
On the purchase date, SBA will arrange to have funds wired to FTA.
Upon receipt of the purchase amount from SBA, FTA shall remit to
Registered Holder, within two (2) business days, the outstanding
principal plus accrued interest through the date immediately preceding
the date of SBA purchase.
(b) SBA's payment of accrued interest to the payment date on a
fixed interest rate Note shall be at the Note rate less the Lender's
servicing fee. On Notes with a variable interest rate, SBA's payment of
accrued interest shall be at that rate in effect on the date of the
earliest uncured Borrower default, if the loan is in default, or at the
rate in effect at the time of purchase, less the lender's fees if the
loan is not in default.
(c) If Lender fails to furnish a current transcript statement as
required by this paragraph and paragraph 13(a)(i) within ten business
days after SBA's request therefor, then SBA may rely on the certified
statement of account with supporting documentation, from FTA. If any
such information shall be inaccurate, whether inadvertently or
otherwise, an appropriate adjustment in settlement will be made as
expeditiously as possible.
(d) SBA shall not be liable for any amount attributable to any late
payment charges pursuant to Paragraph 6 of this Agreement that may be
due FTA or Registered Holder.
(e) Upon written demand by SBA, Lender shall immediately repay to
SBA the amount by which the amount paid by SBA exceeds the amount of
SBA's obligation to Lender under the 750 Agreement, and the amount paid
by SBA for any payments by Borrower which were not remitted by Lender
to FTA, including accrued interest thereon, plus accrued interest at
the Note interest rate computed on the unpaid balance of the Guaranteed
Interest from the date of purchase by SBA to date of repayment by
Lender.
(f) Upon purchase of the Guaranteed Interest by SBA pursuant to
this Paragraph, the rights and obligations of Lender and SBA shall be
governed by the 750 Agreement and any continuing provisions of this
Agreement. SBA shall be deemed a transferee of the Guaranteed Interest
and the final Registered Holder thereof with all the rights and
privileges of such Registered Holder under this Agreement.
12. Default by Lender.
(a) Pursuant to Paragraph 10(a) of this Agreement. FTA notifies the
SBA field office of Loans which are past due. SBA contacts the Lender
to determine status of the Loans.
(b) When SBA determines that the Lender has failed for any reason
to remit to FTA the payments required pursuant to Paragraph 6 of this
Agreement, SBA may purchase the Guaranteed Interest under the
provisions of Paragraph 11 of this Agreement, provided however, under
no circumstances shall SBA be liable for any amount attributable to any
late payment charge.
(c) If SBA purchases the Guaranteed Interest from Registered Holder
because of default by Lender, and if Borrower has not been in uncured
default on any payment due under the Note for more than sixty (60)
calendar days, SBA shall have the option:
(i) to require Lender to purchase the Guaranteed Interest from SBA
for an amount equal to the amount paid by SBA to Registered Holder plus
accrued interest (at the interest rate provided in the Note) from the
date of the SBA purchase to the date of the Lender's repurchase, plus a
penalty equal to twenty percent (20%) of the amount paid by SBA, or
(ii) to require Lender to pay SBA a penalty equal to twenty percent
(20%) of the amount paid by SBA to Registered Holder.
(d) If on the date SBA purchases the Guaranteed Interest from
Registered Holder pursuant to this Paragraph, Borrower shall be in
uncured default for more than sixty (60) calendar days, then the
provisions of Paragraphs 11(e) and 11(f) of this Agreement will become
applicable in lieu of subparagraph (c) of this paragraph.
(e) If Lender fails to furnish a current transcript statement as
required by paragraph 13(a)(i) within ten business days after SBA's
request therefor, then SBA may rely on the certified statement of
account with supporting documentation from FTA. If any such information
shall be inaccurate, whether inadvertently or otherwise, an appropriate
adjustment in settlement will be made as expeditiously as possible.
13. Other Obligations of the Lender.
(a) Lender hereby consents to the purchase of the Guaranteed
Interest by SBA in accordance with Paragraphs 11 and 12 of this
Agreement. Lender shall, within ten business days of a request
therefor, and without charge, furnish to SBA and FTA (i) a transcript
of account, (ii) a current certified statement of the unpaid principal
and interest then owed by Borrower on the Note, and (iii) a statement
covering any payments by Borrower not remitted by Lender to FTA.
(b) Upon request by FTA at any time, Lender shall issue at no
charge a certified statement of the outstanding principal amount of the
Guaranteed Interest and the effective interest rate on the Note as of
the date of such certified statement.
(c) Lender agrees that failure to provide the information requested
pursuant to Paragraphs 10, 11, 12 and 13 of this Agreement may result
in a $100 penalty payable to SBA.
(d) Lender agrees that purchase of the Guaranteed Interest pursuant
to Paragraphs 11 or 12 of this Agreement does not release or otherwise
modify any of Lender's obligations to SBA arising from the Loan or the
750 Agreement, and that such purchase by SBA does not waive any of
SBA's rights against Lender.
(e) Lender agrees that SBA, as final owner of the Guaranteed
Interest under this Agreement, in addition to all rights under the 750
Agreement, shall also have the right to offset against Lender all
rights inuring to SBA under this Agreement against SBA's obligation to
Lender under the 750 Agreement.
(f) Lender agrees to assign, transfer and deliver the Note and
related loan documents to SBA upon written demand from SBA after
purchase of the Guaranteed Interest pursuant to this Agreement.
14. Default by Fiscal and Transfer Agent
(a) If FTA receives any payment from Lender or SBA and fails to
remit to Registered Holder pursuant to Paragraph 7 of this Agreement,
Registered Holder shall have the right to make written demand on FTA
for any payment not remitted by FTA.
(b) If FTA fails to remit any such payment within ten (10) business
days of such demand, Registered Holder shall have the right to make
written demand on the SBA Servicing Office identified in this
Agreement.
(c) Upon receipt of written demand from Registered Holder, SBA will
verify non-payment by FTA. If non-payment by FTA is verified, SBA,
within thirty (30) days of verification of non-payment by FTA, will (i)
make payment directly to Registered Holder of the amount of the
unremitted payment plus interest at the Certificate rate to day of
payment by SBA, or (ii) purchase the Guaranteed Interest pursuant to
Paragraph 11 of this Agreement.
(d) FTA shall repay SBA within ten (10) business days after receipt
of written demand from SBA an amount equal to the unremitted amount
plus interest computed at the interest rate on the Certificate on the
unpaid balance of the Guaranteed Interest from the date of the failure
of FTA to remit to the Registered Holder to the date of FTA's repayment
to SBA. Such payment will not affect FTA's liability for a late payment
charge under Paragraph 7 of this Agreement.
15. Prepayment of Refinancing by Borrower.
(a) A borrower may prepay a Loan guaranteed by SBA at any time
without penalty. A prepayment subject to this Paragraph is any payment
which is greater than twenty percent (20%) of the principal amount
outstanding at the time of prepayment.
(b) For loans approved by SBA or on behalf of SBA prior to February
15, 1985, the Lender shall forward any prepayment amount pertaining to
the Guaranteed Interest to the FTA within three (3) business days of
receipt.
(c) For loans approved by SBA or on behalf of SBA after February
14, 1985, Lender shall transmit written notice to FTA of Borrower's
intent to make a partial or total prepayment of principal. Such
prepayment can be by refinancing or otherwise. The prepayment date is
the date prior to maturity that Lender has established with the FTA,
and on which immediately available funds shall be delivered to FTA. The
written notice shall be received by the FTA at least ten (10) business
days prior to prepayment date, and it shall be Lender's responsibility
to verify receipt of such notice by FTA. Lender's notice to FTA shall
include:
(i) The SBA loan number and borrower name
(ii) The prepayment date
(iii) The principal amount being prepaid
(iv) The accrued interest due the FTA as of prepayment date
(interest shall accrue through and including the calendar day
immediately preceding the prepayment date)
(v) A certification by Lender that, to the best of its knowledge
and belief, the prepayment funds are either Borrower's own funds or
funds borrowed by Borrower (whether or not guaranteed by SBA) pursuant
to a separate transaction
(vi) A certification from an officer of the Lender that the
prepayment is in accordance with the terms of this Agreement, the Note
and applicable law.
The Certifications are intended to guard against Lender's
unilateral repurchase of the Guaranteed Interest from the Registered
Holder without prior written consent of SBA.
Lender's failure to provide such timely certification may result in
a $100 penalty payable to SBA.
(d) On the prepayment date, Lender will wire the amount due to FTA
without notification from FTA. If the total funds are not received by
FTA on the prepayment date, interest continues to accrue through the
day immediately prior to the date that payment is received by FTA. If
funds are not received by FTA on the prepayment date, Lender shall have
thirty (30) calendar days from the date originally identified as the
prepayment date to forward the prepayment funds. The funds will accrue
interest through the day immediately prior to the date payment is
received by FTA. If funds are not received within this thirty (30) day
period, a new written notice is required in accordance with
subparagraph (c) above.
(e) FTA shall, upon receipt of notice pursuant to subparagraph (c)
of this Paragraph, advise the Lender in writing of any discrepancy
between the prepayment information supplied by the lender and the FTA's
current records. Lender agrees to work with FTA to resolve errors or
miscalculations that were made by the Lender or FTA during the course
of the loan and which are discovered subsequent to the prepayment.
(f) FTA will remit the prepayment amount to Registered Holder in
accordance with Paragraph 7 of this Agreement.
16. Option to Purchase by SBA. Pursuant to the 750 Agreement, SBA
shall at any time have the option to purchase from the Registered
Holder the outstanding balance of the Guaranteed Interest at the Note
rate less the Lender's servicing fee. Failure of the Registered Holder
to submit the Certificate to FTA for redemption on the date of
prepayment specified by SBA or FTA will not entitle the Registered
Holder to accrued interest beyond such date.
17. Separate or Side Agreements. Separate or side agreements (i)
between Lender and Registered Holder, (ii) between a Registered Holder
and a subsequent transferee of the Guaranteed Interest, (iii) between
FTA and Lender, or (iv) between FTA and any Registered Holder shall not
in any way obligate SBA to make any payment except as provided in this
Agreement, nor shall it modify the nature or extent of SBA's rights or
obligations under the terms of this Agreement or of the 750 Agreement.
Any such side agreement which has the effect of distorting the
information supplied to SBA is prohibited.
18. Indemnity and Force Majeure. Each party to this Agreement
(including FTA) for itself and its successors and assigns, agrees to
indemnify and hold harmless any other party (including FTA) from and
against any costs, liabilities, and related expenses arising from the
performance of its duties or otherwise arising under this Agreement;
provided that no indemnification shall be provided under this Agreement
for action or failure to act which constitutes negligence, breach of
authority, or bad faith.
If any party hereto (including FTA) is in doubt as to the
applicability of this Agreement to a communication it has received, it
may refer the matter to SBA for an opinion as to whether it may take,
suffer or omit any action pursuant to such communications.
Under no circumstances shall any party hereto (including FTA) be
held liable to any person or entity for special or consequential
damages or for attorneys fees or expenses in connection with its
performance under this Agreement.
If any party hereto (including FTA) shall be delayed in its
performance hereunder or prevented entirely or in part from completing
such performance due to causes or events beyond its control, such delay
or non-performance shall be excused and the reasonable time for
performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance. Causes or events
include but are not limited to: (i) Act of God; (ii) postal
malfunction; (iii) interruption of power or other utility,
transportation, or communication service; (iv) act of civil or military
authority; (v) sabotage; (vi) national emergency; (vii) war; (viii)
explosion, flood, accident, earthquake or other catastrophe; (ix) fire;
(x) strike or other labor problem; (xi) legal action; (xii) present or
future law, government order, rule or regulation; or (xiii) shortage of
suitable parts, materials, labor or transportation. In disputes between
FTA and Lender, or between FTA and Registered Holder, SBA reserves the
right to require FTA to take appropriate action as SBA determines, and
if legal action is required, SBA will pay reasonable attorney's fees
incurred by FTA in taking such action.
19. Fees and Penalties. Lender and Registered Holder shall be
responsible for payment of fees and penalties required of them by this
Agreement which are in effect on the Settlement Date, and as published
from time to time in the Federal Register. If any fees or penalties
required in this Agreement, (including but not limited to those
described in Paragraphs 5, 6, 10, 11, 12, 13, and 15), are not remitted
on a timely basis by Lender, FTA and SBA reserve the right to withhold
such fees and penalties from the settlement of any future Guaranteed
Interest sale or payment on any defaulted guaranteed loan in the
Lender's portfolio.
20. Emergency Repurchase Authority by Lender. In certain critical
situations in which the Borrower's ability to remain in business is
directly dependent on a change in the provisions relating to the
installment payments by Borrower, SBA may permit Lender to repurchase
the Guaranteed Interest from Registered Holder. Lender must submit to
the SBA field office a written request which includes the following:
(i) Current financial statements of the Borrower.
(ii) A written decline from Registered Holder to a specific request
for a change in the terms and conditions of the payment, or a written
statement from FTA that no response was received from Registered Holder
or the Guaranteed Interest is part of a Pool.
(iii) A statement that the proposed change in the terms and
conditions of the Loan is solely for the benefit of Borrower, and
(iv) A certification by Lender that it will make the requested
change in the terms and conditions if repurchase is approved by SBA.
The SBA Field Office must review the financial statements of
Borrower and any other appropriate information and conclude that (i) a
situation exists that Borrower's business will probably fail if the
change is not approved, and (ii) that it is probable that the business
will survive and resume payment if the change is approved. If all
conditions are met, the SBA field office may approve the purchase of
the Guaranteed Interest by Lender.
Guaranteed Interests purchased pursuant to this Paragraph may not
be resold unless the Borrower has made all payments as scheduled in the
Note for a period of twelve (12) months.
21. Inconsistent Provisions and Caption Headings. Any inconsistency
between this Agreement and the 750 Agreement shall be resolved in favor
of this Agreement. Any inconsistency between this Agreement and Title
13, Code of Federal Regulations, shall be resolved in favor of Title
13. The provisions of the Secondary Market Regulations, (Title 13, Code
of Federal Regulations, Part 120) in effect on the Settlement Date, and
as may be amended from time to time in the Federal Register, apply to
this Agreement unless explicitly stated to be inapplicable. The caption
headings for the various Paragraphs herein are for ease of reference
only and are not to be deemed part of these Terms and Conditions.
In consideration of the mutual promises herein contained, the parties
agree to all the provisions of this Agreement. In WITNESS WHEREOF, the
parties have executed this multi-page Agreement this __________ day of
__________ 19 ____ in New York State.
(Registered Holder) ________________________ SMALL BUSINESS
ADMINISTRATION
By: ________________________
Title: ________________________
Date: ________________________
By: Administrator, Small Business Administration
(Lender) ________________________
By: ________________________
Title: ________________________
Date: ________________________
Examined and Accepted by Fiscal and Transfer Agent by:
________________________
COLSON SERVICES CORP., P.O. Box 54, Bowling Green Station, New York,
N.Y. 10274
NOTICE: THE GUARANTEE OF SBA RELATES TO THE UNPAID PRINCIPAL
BALANCE OF THE GUARANTEED INTEREST AND THE INTEREST DUE THEREON. ANY
PREMIUM PAID BY THE REGISTERED HOLDER FOR THE GUARANTEED INTEREST IS
NOT COVERED BY SBA'S GUARANTEE AND IS SUBJECT TO LOSS IN THE EVENT OF
PREPAYMENT OR DEFAULT.
This form is required to obtain a benefit.
ATTACHMENT 1--SBA FORM 1086 SAMPLE CALCULATION
Lender's and Investor's Share of a Borrower's Payment
Total Borrower Payment Received By Lender............... $3,450.05
Total Interest Payment Calculation:
Borrower's Balance.................................. $288,857.10
Multiplied by
Borrower's Interest Rate............................ 8.750%
Multiplied by
Number of Paid Interest Days........................ 31
Divided by
Interest Calendar Basis............................. 365
---------------
Total Interest payment...................... $2,146.64
Investor's Share of Interest Payment:
Borrower's Balance.................................. $288,857.10
Multiplied by
Percentage of Loan Sold to Investor................. 75.000%
Multiplied by
Interest Rate Sold.................................. 7.750%
Multiplied by
Number of Paid Interest Days*....................... 31
Divided by
Interest Calendar Basis*............................ 365
Investor's Share of Interest Payment to be Remitted to
FTA.................................................... $1,425.98
Lender's Share of Interest Payment:
Borrower's Balance.................................. $288,857.10
Multiplied by
Percentage of Loan Retained by Lender............... 25.000%
Multiplied by
Borrower's Interest Rate............................ 8.750%
Multiplied by
Number of Paid Interest Days........................ 31
Divided by
Interest Calendar Basis............................. 365
Lender's Share of Interest Payment to be Retained by
Lender................................................. $536.66
Lender's Servicing Fee:
Total Interest...................................... $2,146.64
Minus
Investor's Interest................................. $1,425.98
Minus
Lender's Interest................................... $536.66
Lender's Servicing Fee to be Retained by Lender......... $184.00
Total Borrower Payment received By Lender............... $3,450.05
Total Principal Payment:
Borrower's Total Payment............................ $3,450.05
Minus
Total Interest...................................... $2,146.64
---------------
Total Principal Payment..................... $1,303.41
Investor's Share of Principal Payment:
Total Principal Payment............................. $1,303.41
Multiplied by
Percentage of Loan Sold to Investor................. 75.000%
Investor's Share of Principal Payment to be Remitted to
FTA.................................................... $977.56
Lender's Share of Principal Payment:
Total Principal Payment............................. $1,303.41
Minus
Investor's Principal Payment........................ $977.56
Lender's Share of Principal Payment to be Retained by
Lender................................................. $325.85
Total to be Remitted to the FTA:
Investor's Share of Interest Payment................ $1,425.98
Plus
Investor's Share of Principal Payment............... $977.56
---------------
Total to be Remitted to FTA................. $2,403.54
Total to be Retained by the Lender:
Lender's Share of Interest Payment.................. $536.66
Plus
Lender's Share of Principal Payment................. 325.85
Plus
Lender's Servicing Fee.............................. $184.00
---------------
Total to be Retained by Lender.............. $1,046.51
Payment Distribution Proof:
Borrower's Total Payment............................ $3,450.05
Minus
Total to be Remitted to the FTA..................... $2,403.54
Minus
Total to be Retained by Lender...................... $1,046.51
Payment Distribution Proof.............................. $0.00
*Note: Figures shown are for illustrative purposes only. This example
utilizes an actual number of days in each month with a 365 days per
year basis. This same procedure may also be utilized for a constant 30
days in each month with a 360 days per year basis.
ATTACHMENT 2--SBA FORM 1086
SBA Field Office Codes and Cities
Region 1
0101 Boston, MA
0172 Augusta, ME
0189 Concord, NH
0156 Hartford, CT
0150 Montpelier, VT
0165 Providence, RI
0130 Springfield, MA
Region 2
0296 Buffalo, NY
0299 Newark, NJ
0202 New York, NY
0252 Hato Rey, PR
0248 Syracuse, NY
0206 Elmira, NY
0235 Melville, NY
0219 Rochester, NY
Region 3
0373 Baltimore, MD
0390 Clarksburg, WV
0303 Philadelphia, PA
0358 Pittsburgh, PA
0304 Richmond, VA
0353 Washington, DC
0325 Charleston, WV
0316 Harrisburg, PA
0318 Wilkes-Barre, PA
0341 Wilmington, DE
Region 4
0405 Atlanta, GA
0459 Birmingham, AL
0460 Charlotte, NC
0464 Columbia, SC
0470 Jackson, MS
0491 Jacksonville, FL
0457 Louisville, KY
0455 Miami, FL
0474 Nashville, TN
0438 Gulfport, MS
Region 5
0507 Chicago, IL
0549 Cleveland, OH
0593 Columbus, OH
0515 Detroit, MI
0562 Indianapolis, IN
0563 Madison, WI
0508 Minneapolis, MN
0545 Cincinnati, OH
0543 Milwaukee, WI
0547 Marquette, MI
0517 Springfield, IL
Region 6
0682 Albuquerque, NM
0610 Dallas, TX
0677 El Paso, TX
0671 Houston, TX
0669 Little Rock, AR
0639 Harlingen (LRGV), TX
0678 Lubbock, TX
0679 New Orleans, LA
0680 Oklahoma City, OK
0681 San Antonio, TX
0637 Corpus Christi, TX
0623 Fort Worth, TX
Region 7
0736 Cedar Rapids, IA
0761 Des Moines, IA
0709 Kansas City, MO
0766 Omaha, NE
0768 St. Louis, MO
0767 Wichita, KS
0721 Springfield, MO
Region 8
0897 Casper, Wy
0811 Denver, CO
0875 Fargo, ND
0885 Helena, MT
0883 Salt Lake City, UT
0876 Sioux Falls, SD
Region 9
0942 Fresno, CA
0951 Honolulu, HI
0944 Las Vegas, NV
0914 Los Angeles, CA
0988 Phoenix, AZ
0954 San Diego, CA
0912 San Francisco, CA
0920 Santa Ana, CA
0995 Agana, Guam
0931 Sacramento, CA
0992 Fresno Comm. Loan
Servicing Center
Region 10
1084 Anchorage, AK
1087 Boise, ID
1086 Portland, OR
1013 Seattle, WA
1094 Spokane, WA
ATTACHMENT 3--SBA FORM 1086
EXAMPLE OF A PENALTY CALCULATION FOR LATE LENDER REMITTANCE OF A
BORROWER PAYMENT (See Paragraph 6(c))
Example 1
Assume:
1. that a $1,000 payment received by Lender as a regularly
scheduled Borrower payment is received by the FTA on the
tenth of the month (a business day) following receipt by
Lender;
2. that the interest rate on the note less the Lender's
servicing fee is 7.75%;
3. that interest is calculated on a 30/360 day basis:
(a) The late penalty is the greater of $100 or 5% of the
payment amount, subject to a $5,000 maximum on the
Lender's total monthly remittance. $1,000 x 5%=$50. The
penalty is $100......................................... $100
(b) A penalty equal to the interest on the unremitted
amount at the rate provided in the Note (less the rate
of the Lender's servicing feel)
Unremitted amount.................................... $1,000
Multiplied by Note Rate minus Lender's servicing fee. 7.75%
Multiplied by number of late days.................... 5
Divided by interest calendar basis................... 350
----------
$1.08
(c) A late penalty charge calculated at a rate of 12% per
annum on the unremitted amount
Unremitted amount.................................... $1,000
Multiplied by 12%.................................... 12%
Multiplied by number of late days.................... 5
Divided by interest calendar basis................... 360
----------
$1.67
TOTAL PENALTY.................................... $102.75
ATTACHMENT 3--SBA FORM 1086
EXAMPLE OF A PENALTY CALCULATION FOR LATE LENDER REMITTANCE OF A
BORROWER PAYMENT (See Paragraph 6(c))
Example 2
Assume:
1. that a $5,145.96 payment received by lender as a
regularly scheduled Borrower payment is received by the
FTA on the fifteenth of the month (a business day)
following receipt by the Lender;
2. that the interest rate on the note less the Lender's
servicing fee is 7.75%;
3. that interest is calculated on an actual/365 day basis:
(a) The late penalty is the greater of $100 or 5% of
the payment amount, subject to a $5,000 maximum on the
Lender's total monthly remittance. $5.145.96 x
5%=$257.30. The penalty is $257.30.................... $257.30
(b) A penalty equal to the interest on the unremitted
amount at the rate provided in the Note (less the rate
of the Lender's servicing fee)
Unremitted amount.................................. $5,145.96
Multiplied by Note rate minus Lender's servicing
fee............................................... 7.75%
Multiplied by number of late days.................. 10
Divided by interest calendar basis................. 365
------------
$10.93
(c) A late penalty charge calculated at a rate of 12%
per annum on the unremitted amount
Unremitted amount.................................. $5,145.96
Multiplied by 12%.................................. 12%
Multiplied by number of late days.................. 10
Divided by interest calendar basis................. 365
------------
$16.92
TOTAL PENALTY.................................. $285.15
ATTACHMENT 4--SBA FORM 1086
PLEASE NOTE: Public reporting burden for this collection of
information is estimated to average 3 hours and 45 minutes per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden, to:
Chief, Administrative Information Branch, Suite 5000, 409 Third Street,
S.W., Washington, D.C., 20416; and to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, DC,
20503.
[FR Doc. 94-11793 Filed 5-16-94; 8:45 am]
