November 29, 2017
C-Suite Wednesday — REMINDER: SBA 7(a) Liquidation Wrap-Up Reports Deadline is December 1
The two year window to submit wrap-up reports for SBA 7(a) loans liquidated prior to December 1, 2015 is now here.
Double check your PARRiS score in the SBA One dashboard for a list of your loans that fall in this category.
If you have a loan that is still in liquidation and can’t be wrapped up by Friday, you must ask SBA for an extension or you risk receiving an invoice from the agency for the full amount of the guaranty.
From SBA SOP 5057 2, page 158
Consequences of Failure to Submit a Timely Wrap-up Report
If a Lender fails to submit a Wrap-up Report within the timeframe specified in Subparagraph 1. above, in addition to referring the Lender to the SBA Office of Credit Risk Management for possible enforcement action, SBA has the right to require the Lender to purchase the loan back from SBA, charge-off the loan balance and, if appropriate, to refer the loan to Treasury after assignment of the loan documents.
From notice 5000-1378
Prudent Liquidation For loans in which the SBA has honored the guaranty (purchased), but were not fully liquidated prior to December 1, 2015, Lenders also must comply with SBA’s new deadline for Prudent Liquidation — Lenders must complete prudent liquidation activities and submit an acceptable Wrap-up Report in an electronic format to the appropriate SBA Loan Center no later than 24 months after purchase by SBA, or 24 months after the effective date of SOP 50 57 2, (December 1, 2017).
For loans with guaranties that were purchased after December 1, 2015, the “later” 24 month period is “24 months after purchase.”
For loans with guaranties that were purchased prior to December 1, 2015, the “later” 24 month period is “24 months after the effective date” of the SOP. For loans in the latter category, this allows Lenders 24-months from the effective date of the SOP to complete Prudent Liquidation of those loans and submit a Wrap-Up Report.
An extension of the 24 month deadline may be approved in writing by the SBA prior to the expiration of the applicable 24 month period. (SOP 50 57 2, Chapter 26, Paragraph B, and Chapter 23, Paragraphs E and F. Please note that the SOP actually refers to Paragraphs E and J, however, the correct reference is to Paragraphs E and F.)
Editor Note: I understand there are separate wrap-up extension forms for Herndon, Little Rock and Fresno. As soon as I track them down, I’ll amend this post and link them for your use.