SBA Express Regulations

SMALL BUSINESS ACT

§ 4(b)(2XA)(xi)to
§ 4(b)(3)

(xi)
number and dollar amount of mergers and acquisitions
by size of acquiring and acquired firm; and

(xii)

concentration ratios; and

(B)
publishing annually a repOli giving a comparative analysis and Annualreport,
interpretation of the historical trends of the small business sector as reflected by the data
publication.
acquired pursuant to subparagraph (A) of this subsection.
(3)65

Risk managemer
database.

RISK MANAGEMENT OAT ABASE.-

65Newsubsection 4(b)(3) added by § 102 ofP.L. 104-208, approved Sept. 30, 1996 (110 Stat. 3009-725). Former subsection
4(b)(3) added by § 3 ofP.L. 98-362, approved July 16, 1984(98 Stat. 431), effective Oct. 1, 1984, per § 7(a) thereof. Section
4(b)(3) was extended to March 31,1991, per § 212 ofP.L. 101-574,approved Nov. 15, 1990 (104 Stat. 2821). The same
extension was enacted by § II ofP.L. 101-515, approved Nov. 5, 1990 (104 Stat. 2145). The sunset date was extended to
Oct. I, 1994 by § 225 of P.L. 102-366,approved Sept. 4, 1992 (106 Stat. 1001); no further extensions were enacted. Expired
§ 4(b)(3) is reprinted below:
(A) The Administrator shall, not later than ninety days after the effective date of the Small Business Computer
Security and Education Act of 1984, establish an advisory council to be known as the Small Business Computer
Security and Education Advisory Council (hereinafter referred to as the "advisory council").
(B) The advisory council shall consist of the following members:
(i) an official of the Small Business Administration, appointed by the Administrator;
(ii) an official of the Institute for Computer Sciences and Technology of the Department of Commerce, appointed
by the Secretary of Commerce;
(iii) an official of the Department of Justice, appointed by the Attorney General, who is knowledgeable about issues
of computer security and its protection;
(iv) an official of the Department of Defense, appointed by the Secretary of Defense, who is knowledgeable about
issues of computer security;
(v) one individual, appointed by the Administrator, who is representative of the interests of the manufacturers of
computer hardware to small business concerns;
(vi) one individual, appointed by the Administrator, who is representative of the interests of the manufacturers of
computer software to small business concerns;
(vii) one individual, appointed by the Administrator, who is representative of the interests of the providers of
computer liability insurance to small business concerns;
(viii) one individual, appointed by the Administrator, who is representative of the i~terests of the providers of
computer security equipment and services to small business concerns;
(ix)one individual, appointed by the Administrator, who is representative ofthe interests of associations of small
business concerns, other than small business concerns engaging in any of the activities described in clauses (v)
through (viii); and
(x) such additional qualified individuals from the private sector, appointed by the Administrator, as the

25

(Rev. 11)
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§ 4(b)(3)(B) to
§ 4(b)(3XC)(i)

SMALL BUSINESS ACT

section 7 of this Act and title V of the Small Business Investment Act of 1958, a management
information system that will generate a database capable of providing timely and accurate
information in order to identify loan underwriting, collections, recovery, and liquidation
problems.
(B)
INFORMATION TO BE MAINTAINED.-In addition to such
other information as the Administration considers appropriate, the database established under
subparagraph (A) shall, with respect to each loan program described in subparagraph (A),
include information relating to(i)

the identity of the institution making the guaranteed

(ii)

the identity of the borrower;

(iii)

the total dollar amount of the loan or debenture;

(iv)

the total dollar amount of government exposure in each

(v)

the district of the Administration in which the borrower

loan or issuing the debenture;

loan;

has its principal office;
(vi)
the principal line of business of the borrower, as
identified by Standard Industrial Classification Code (or any successor to that system);
(vii)
the delinquency rate for each program (including
number of instances and days overdue);
(viii)

the number and amount of repurchases, losses, and

recoveries in each program;

(ix)
the number of deferrals or forbearances in each
program (including days and number of instances);
(x)
comparisons on the basis of loan program, lender,
Administration district and region, for all the data elements maintained; and
(xi)
underwriting characteristics of each loan that has
entered into default, including term, amount and type of collateral, loan-to-value and other
actual and projected ratios, line of business, credit history, and type of loan.
(C)
DEADLINE FOR OPERATIONAL CAPABILITY.- The
database established under subparagraph (A) shall(i)

be operational not later than June 30, 1997; and

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(Rev. II)
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Page 1 of2

Circular No. A-129 -- Managing Federal Credit Programs

B. MANAGEMENT
OF GUARANTEEDLOANLENDERSANDSERVIC~RS
REFERENCES:
IGuidance

HTreasury/FMS"Manag!ng Federal Receivables"

1. Lender Eligibility.
a.

Participation Criteria. Federal credit granting agencies shall establish and publish in the Federal Register
specific eligibility criteria for lender participation in Federally guaranteed loan programs. These criteria should
include:
(1) Requirements that the lender is not currently debarred/suspended
Government contract or delinquent on a Government debt;

from participation in a

:I(-(2}

Qualification requirements for principal officers and staff of the lender;
(3) Fidelity/surety bonding and/or errors and omissions insurance with the Federal Government as a
loss payee, where appropriate, for new or non-regulated lenders or lenders with questionable
performance under Federal guarantee programs;
(4) Financial and capital requirements for lenders not regulated by a Federal financial institution
regulatory agency, including minimum net worth requirements based on business volume.

b.

Review of Eligibility. Agencies shall review and document a lender's eligibility for continued participation in a
guaranteed loan program at least every two years. Ideally, these reviews should be conducted in conjunction
with on-site reviews of lender operations (see B.3) or other required reviews, such as renewal of a lender
agreement (see B.2). Lenders not meeting standards for continued participation should be decertified. In
addition to the participation criteria above, guarantor agencies should consider lender performance as a
critical factor in determining continued eligibility for participation.

c.

Fees. When authorized and appropriated for such purposes, agencies should assess non-refundable
defray the costs of determining and reviewing lender eligibility.

d.

Decertification. Guarantor agencies should establish specific procedures to decertify lenders or take other
appropriate action any time there is:
(1) Significant and/or continuing non-conformance

fees to

with agency standards; and/or

(2) Failure to meet financial and capital requirements or other eligibility criteria.
Agency procedures should define the process and establish timetables by which decertified lenders
can apply for reinstatement of eligibility for Federal guaranteed loan programs.
e.

Loan SelVicers. Lenders transferring and/or assigning the right to service guaranteed loans to a loan servicer
should use only servicers meeting applicable standards set by the Federal guarantor agency. Where
appropriate, agencies may adopt standards for loan servicers established by a Government Sponsored
Enterprise (GSE) or a similar organization (e.g., Government National Mortgage Association for single family
mortgages) and/or may authorize lenders to use servicers that have been approved by a GSE or similar

organization.

.

2. Lender Agreements.

Agencies should enter into written agreements with lenders that have been determined to
be eligible for participation in a guaranteed loan program. These agreements should incorporate general participation
requirements, performance standards and other applicable requirements of this Circular. Agencies are encouraged,
where not prohibited by authorizing legislation, to set a fixed duration for the agreement tei ensure a formal review of
the lender eligibility for continued participation in the program.

a.

GeneralParticipationRequirements.
(1) Requirements for lender eligibility, including participation criteria, eligibility reviews, fees, and
decertification (see Section 1, above);
(2) Agency and lender responsibilities
and, where feasible

for sharing the risk of loan defaults (see Section 11.3.a.(1)};

http://www.whitehouse.gov/omb/circulars/a129/a129rev
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Circular No. A-129 -- Managing Federal Credit Programs

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Page 2 of2

(3) Maximum delinquency, default and claims rates for lenders, taking into account individual program
characteristics.
b.

Perfonnance Standards. Agencies should include due diligence requirements for originating, servicing, and
collecting loans in their lender agreements. This may be accomplished by referencing agency regulations or
guidelines. Examples of due diligence standards include collection procedures for past due accounts,
delinquent debtor counseling procedures and litigation to enforce loan contracts.
Agencies should ensure, through the claims review process, that lenders have met these standards prior to
making a claim payment. Agencies should reduce claim amounts or reject claims for lender nonperformance.

c. ReportingRequirements. Federal credit granting agencies should require certain data to monitorthe health of
their guaranteed loan portfolios,track and evaluate lender performance and satisfy OMB,Treasury, and other
reporting requirements which include the File Typeapplication/pdfFile Modified2007-05-01File Created2007-05-01