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# Operate as a CDC

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## Content

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## Resources for CDCs

### Lender portal login

SBA’s lender portal allows CDCs to view their own quarterly performance data, including their most current composite risk rating, the lender risk rating. CDCs can also access data on peer group and portfolio averages.

### E-Tran

E-Tran is SBA’s online portal which CDCs can use to electronically submit loan guaranty packages and loan servicing request packages. CDCs may also use E-Tran to submit certain servicing actions using their unilateral authority.

To get an E-Tran account, apply online or email your request for an account to CLS@sba.gov.

## Lending lifecycle

### Approval-authorization

The Sacramento Loan Processing Center (SLPC) reviews all 504 loan applications. If an SBA loan officer needs additional information, documentation, or explanation, the SLPC will contact the CDC via email.

The authorization is SBA's written agreement with the CDC providing the terms and conditions under which SBA will guarantee a business loan.

SBA establishes the wording for all standard 504 authorization conditions in the National 504 Authorization Boilerplate. Use the boilerplate as a template when you submit an authorization package.

The 504 authorization wizard makes it easier for you to create authorizations based on the boilerplate. If you’re unable to install the wizard, contact SBA at auth-504@sba.gov.

### Closing

CDCs and SBA must use SBA Form 2286 for all 504 debenture closings.

### Servicing loans

A loan moves from "approval” status to "regular servicing" status when the following three conditions are met
                  - It’s closed in accordance with the terms and conditions of the loan authorization
                  - The final disbursement has been made
                  - SBA's guaranty fee has been paid

The Commercial Loan Service Centers (CLSC) in Fresno and Little Rock address loan servicing requests from CDCs. If you have a servicing request, submit it to the appropriate center that’s handling the loan.

However, you may take some servicing actions without prior approval from SBA. Even if an action doesn’t require SBA’s prior approval, you must document the reasons for your decisions. Keep those documents for SBA to review.

### 504 liquidation

For 504 loans made under the Premier Certified Lenders Program (PCLP), or if the CDC is a designated Authorized CDC Liquidator (ACL), the CDC is primarily responsible for liquidating the loan. Otherwise, CLSCs are primarily responsible for liquidation.

#### Debenture purchase

You should ask the appropriate CLCS to purchase the debenture and place the loan into liquidation status when:
                  - The loan is 60 or more days past due with no prospect of a deferment or a work out.  
                  - 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.

You must make a site visit and submit a detailed report to SBA within 15 days of SBA placing the loan into liquidation status.

#### Liquidation plan

After a site visit, you should prepare a 504 liquidation plan. Prepare the liquidation plan before you take any significant action to liquidate the loan. Submit the plan to SBA within 30 days after the purchase of the debenture.

#### Expenses

SBA will reimburse you for recoverable expenses relating to the liquidation of the loan subject to:
                  - Requests 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 at the time the wrap-up report is submitted.
                  - Copies of invoices and other supporting documentation must be included.
                  - Requests may be submitted with the wrap-up report, regardless of dollar amount.

 

#### Offer in Compromise (OIC)

An OIC is a monetary offer typically made at the end of the liquidation of all business and other worthwhile assets. When the borrower is unable to pay their SBA loan in full after liquidation of all worthwhile collateral, it may be appropriate to settle for less than the full amount due.

If you want SBA to consider an OIC, submit your request using the OIC tabs.

#### Wrap-up report

You must submit a 504 liquidation wrap-up report to SBA within 90 days of completing all reasonable and cost-effective recovery efforts.

### Litigation

ACLs and PCLP CDCs are responsible for conducting all litigation needed to ensure recovery on all of the 504 Loans in their portfolios. You must submit a 504 litigation plan to SBA for review and approval.

For non-ACLs and non-PCLP CDCs, SBA is responsible for handling litigation on 504 loans.

### 504 debt refinancing program

Small businesses can use the CDC/504 loan program to refinance qualifying existing debt in any year that the program is at zero subsidy. Borrowers are able to refinance up to 90 percent of the current appraised property value. The refinancing may also include eligible business expenses, with a maximum loan to value of 85 percent.To qualify for refinancing, a business must have been in operation for at least two years. Additionally, the debt to be refinanced must be a commercial loan:
                  - That was incurred for the benefit of the small business concern not less than two years before the date of the 504 debt refinancing application
                  - The proceeds of which were used to acquire a 504 eligible fixed asset
                  - That is secured by 504 eligible fixed assets
                  - For which the borrower has been current on all payments for at least the last 12 months prior to application

Existing 504 projects and government-guaranteed loans are not eligible to be refinanced.

##  SBA lenders finance small businesses

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