Regulation

ehiers on DSK2VPTVN1PROD with CFR

Small Business Administration

§ 103.5

activity, with respect to any matter involving SBA assistance.
(b) Soliciting for the provision of
services to an Applicant by another entity when there is an undisclosed business relationship between the two parties.
(c) Violating ethical guidelines which
govern the profession or business of the
Agent or which are published at any
time by SBA.
(d) Implying or stating that the work
to be performed for an Applicant will
include use of political or other special
influence with SBA. Examples include
indicating that the entity is affiliated
with or paid, endorsed or employed by
SBA, advertising using the words Small
Business Administration or SBA in a
manner that implies SBA’s endorsement or sponsorship, use of SBA’s seal
or symbol, and giving a ‘‘guaranty’’ to
an Applicant that the application will
be approved.
(e) Charging or proposing to charge
any fee that does not bear a necessary
and reasonable relationship to the
services actually rendered or expenses
actually incurred in connection with a
matter before SBA or which is materially inconsistent with the provisions of
an applicable compensation agreement
or Lender Service Provider agreement.
A fee based solely on a percentage of a
loan or guarantee amount can be reasonable,
depending
on
the
circumstances of a case and the services
actually rendered.
(f) Engaging in any conduct indicating a lack of business integrity or
business honesty, including debarment,
criminal conviction, or civil judgment
within the last seven years for fraud,
embezzlement, theft, forgery, bribery,
falsification or destruction of records,
false statements, conspiracy, receiving
stolen property, false claims, or obstruction of justice.
(g) Acting as both a Lender Service
Provider or Referral Agent and a Packager for an Applicant on the same SBA
business loan and receiving compensation for such activity from both the
Applicant and lender. A limited exception to this ‘‘two master’’ prohibition
exists when an Agent acts as a Packager and is compensated by the Applicant for packaging services; also acts
as a Referral Agent and is compensated

by the lender for those activities; discloses the referral activities to the Applicant; and discloses the packaging
activities to the lender.
(h) Violating materially the terms of
any compensation agreement or Lender
Service Provider agreement provided
for in § 103.5.
(i) Violating or assisting in the violation of any SBA regulations, policies,
or procedures of which the Applicant
has been made aware.
§ 103.5 How does SBA regulate an
Agent’s fees and provision of service?
(a) Any Applicant, Agent, or Packager must execute and provide to SBA
a compensation agreement, and any
Lender Service Provider must execute
and provide to SBA a Lender Service
Provider agreement. Each agreement
governs the compensation charged for
services rendered or to be rendered to
the Applicant or lender in any matter
involving SBA assistance. SBA provides the form of compensation agreement and a suggested form of Lender
Service Provider agreement to be used
by Agents.
(b) Compensation agreements must
provide that in cases where SBA deems
the compensation unreasonable, the
Agent or Packager must: reduce the
charge to an amount SBA deems reasonable, refund any sum in excess of
the amount SBA deems reasonable to
the Applicant, and refrain from charging or collecting, directly or indirectly,
from the Applicant an amount in excess of the amount SBA deems reasonable.
(c) Each Lender Service Provider
must enter into a written agreement
with each lender for whom it acts in
that capacity. SBA will review all such
agreements. Such agreements need not
contain each and every provision found
in the SBA’s suggested form of agreement. However, each agreement must
indicate that both parties agree not to
engage in any sharing of secondary
market premiums, that the services to
be provided are accurately described,
and that the agreement is otherwise
consistent with SBA requirements.
Subject to the prohibition on splitting
premiums, lenders have reasonable discretion in setting compensation for

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Pt. 105

13 CFR Ch. I (1–1–14 Edition)

Lender Service Providers. However,
such compensation may not be directly
charged to an Applicant or borrower.

closure, Qualified Trusts and Certificates of Divestiture.

PART 105—STANDARDS OF CONDUCT AND EMPLOYEE RESTRICTIONS AND RESPONSIBILITIES

RESTRICTIONS AND RESPONSIBILITIES
RELATED TO SBA EMPLOYEES AND
FORMER EMPLOYEES

[69 FR 63922, Nov. 3, 2004]

§ 105.201

STANDARDS OF CONDUCT
Sec.
105.101 Cross-reference to employee ethical
conduct standards and financial disclosure regulations.
RESTRICTIONS AND RESPONSIBILITIES RELATED
TO SBA EMPLOYEES AND FORMER EMPLOYEES
105.201 Definitions.
105.202 Employment of former employee by
person previously the recipient of SBA
Assistance.
105.203 SBA Assistance to person employing
former SBA employee.
105.204 Assistance to SBA employees or
members of their household.
105.205 Duty to report irregularities.
105.206 Applicable rules and directions.
105.207 Politically motivated activities with
respect to the Minority Small Business
Program.
105.208 Penalties.
RESTRICTIONS ON SBA ASSISTANCE TO OTHER
INDIVIDUALS
105.301 Assistance to officers or employees
of other Government organizations.
105.302 Assistance to employees or members
of quasi-Government organizations.
ADMINISTRATIVE PROVISIONS
105.401
105.402
105.403

Standards of Conduct Committee.
Standards of Conduct Counselors.
Designated Agency Ethics Officials.

AUTHORITY: 5 U.S.C. 7301; 15 U.S.C. 634,
637(a)(18) and (a)(19), 642, and 645(a).
SOURCE: 61 FR 2399, Jan. 26, 1996, unless
otherwise noted.

STANDARDS OF CONDUCT

§ 105.202 Employment of former employee by person previously the recipient of SBA Assistance.

§ 105.101 Cross-reference to employee
ethical conduct standards and financial disclosure regulations.

ehiers on DSK2VPTVN1PROD with CFR

Definitions.

(a) Employee means an officer or employee of the SBA regardless of grade,
status or place of employment, including employees on leave with pay or on
leave without pay other than those on
extended military leave. Unless stated
otherwise. Employee shall include
those within the category of Special
Government Employee.
(b) Special Government Employee
means an officer or employee of SBA,
who is retained, appointed or employed
to perform temporary duties on a fulltime or intermittent basis, with or
without compensation, for not to exceed 130 days during any period of 365
consecutive days.
(c) Person means an individual, a corporation, a company, an association, a
firm, a partnership, a society, a joint
stock company, or any other organization or institution.
(d) Household member means spouse
and minor children of an employee, all
blood relations of the employee and
any spouse who resides in the same
place of abode with the employee.
(e) SBA Assistance means financial,
contractual, grant, managerial or
other aid, including size determinations, section 8(a) participation, licensing, certification, and other eligibility
determinations made by SBA. The
term also includes an express decision
to compromise or defer possible litigation or other adverse action.

(a) No former employee, who occupied a position involving discretion
over, or who exercised discretion with
respect to, the granting or administration of SBA Assistance may occupy a
position as employee, partner, agent,
attorney or other representative of a
concern which has received this SBA

In addition to this part, Small Business Administration (SBA) employees
should refer to the Standards of Ethical Conduct for Employees of the Executive Branch at 5 CFR part 2635 and
the regulations at 5 CFR part 2634 entitled, Executive Branch Financial Dis-

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