Don’t Let Fee Disclosure Mistakes Deny Your Guaranty
A recent SBA Inspector General audit says 40-percent of SBA Form 159’s are incorrectly completed by lenders.
The OIG writes, “Loan agents frequently play an important role within SBA lending programs, often facilitating access to capital by connecting borrowers in search of financial assistance with lenders offering SBA products or by providing other services. However, at times, these third-party relationships have resulted in SBA program loss and risk. Since 2005, SBA OIG has investigated at least 22 cases with confirmed loan agent fraud totaling at least $335 million. Further, our analysis determined that loan agents were involved in approximately 15 percent of all 7(a) loans and resulted in increased risk of default.
In examining SBA Form 159, “Fee Disclosure Form and Compensation Agreement,” the Inspector General said 32% of all forms contain errors, “We conducted our own analysis of the data recorded between December 2010 and September 2014 and determined that of the 51,000 records during that period: • 28 percent contained missing or inaccurate loan number information; • 23 percent that indicated referral agent involvement had incomplete information related to the agent or their compensation; 29 and • 7 percent did not disclose any compensation amount.”
Looking for evidence of risk patterns and fraud, the SBA will almost certainly be paying greater attention to your Form 159 preparation and documentation.
Remember: Failure to correctly disclose and document such fees can risk your loan guarantee and negatively impact your PARRiS score. Recent cases of lender impropriety in this area have resulted in criminal charges and denial of SBA loan guaranties.
This webinar will ensure that your loan team knows 1) which fees are allowed by the SBA, 2) how those fees need to be disclosed, and 3) how to document those fees on Form 159.
Part I of this webinar will cover how to work with loan brokers—how to vet them and manage your relationship with them according to newly released OIG mandates. Part II will discuss which agent- and lender-packaging fees are allowable, how they’re payable—including clarification of the “two-master rule”—and how to document them correctly on Form 159.
In short, this webinar will make your staff experts on the rules governing agent- and lender-fee compliance, including Form 159 disclosure and documentation. It’s smart insurance for you, your team and your bank.
Best of all, this training is only $389 (multiple locations from the same organization is a flat fee of $489).
The webinar will address both SBA 7(a) and SBA 504 loan requirements.
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Bob Coleman, Publisher, Coleman Report
Bob Coleman is the Author of “Money Money Everywhere and Not a Drop for Main Street.” He is the Publisher of the Coleman Report, a trade newsletter and website for SBA and small business lenders. He produces online training videos and webinars for small business lenders to teach them to make less risky loans to Main Street.
- How to make sure you’re dealing with an SBA-approved broker
- What are “best practices” guidelines for conducting your relationship with outside agents—what’s allowed, what’s not?
- Which fees are allowed in SBA loans and which are not?
- How to justify and document the lender’s packaging fee
- What recommendations has the Office of the Inspector General made for increasing scrutiny on Form 159—and why?
- The “two-master rule”—how to determine who gets paid which fees
- How to correctly use the SBA One platform to document loan fees
- How flat-rate $2,500 packaging fee must be documented for SBA 7(a) loans
- Rules for disclosing professional fees (legal, appraisal, engineering, etc.)
- How and when you can charge 1% of the loan amount for a packaging fee
- What are the allowable loan documentation charges?
1) Previous customers need only to send an email to joseph@colemanreport.com with “Register Agent Fees Webinar” in the Subject Line. We will do all the paperwork and charge your credit card on file, or send you a PayPal request.
2) Call Joseph Coleman at Customer Service at 818-790-4591 extension 1
3) Fax the order form to: 818-790-7859
4) Mail the order form to: Coleman Publishing, 28081 Marguerite Parkway #4525, Mission Viejo, CA 92690
5) Click “Add to Cart” to pay using PayPal