November 5, 2009

The SBA giveth, but the SBA can taketh away

The SBA expects its guaranty to be protected at all times; that banks perform proper due dilligence when underwriting small business loans; carefully documenting and managing their SBA loan portfolio through maturity.  Banks are expected to treat SBA loans as if the bank were fully exposed without an SBA guaranty.  The SBA guaranty on a given loan that defaults can be partially cut or worse, completely denied, if the SBA finds that the bank carelessly structured, improperly documented, or otherwise grossly mismanaged the loan.        

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