ND Loan Liquidation/Purchase Information

The following steps provide a brief overview to help lenders get started in liquidating SBA guaranteed loans, followed by the process of requesting SBA to honor its guaranty (i.e. purchasing the guaranteed portion of the loan).

Step 1 - Transfer loan to liquidation

 

Lenders must notify fsc.servicing@sba.gov that the loan is being transferred to liquidation status. Include the borrower name and the loan number in subject line.

SBA requires all lenders to make site visits and prepare a detailed report containing an inventory of remaining assets and an assessment of their condition and value. Site visits must be performed within 60 days of an unremedied payment default or sooner if there are assets with significant value that could easily be moved or depleted. If a payment default does not exist, but an event has occurred which would cause the loan to be placed in liquidation (i.e., bankruptcy filing, business shutdown, or foreclosure by a prior lienholder), a site visit must be done within 15 days of that event.

When the loan is transferred into liquidation status, please remember to change the status code on your monthly 1502 status report to “5” for in-liquidation status.

 

Step 2 - Prepare a Liquidation Plan

 

Prior to initiating recovery procedures, Lenders are strongly encouraged to prepare a comprehensive liquidation plan based on the facts known and reasonable assumptions.  As a guide, you may refer to and use SBA Form 1979 for assistance in preparing a plan.

 

Step 3 - Submit Final Wrap Up Report

 

Lenders should summarize liquidation activities and recommend options for further collection or compromise of remaining debt.

 

Step 4 - Purchase

 

Lenders must submit a 10-Tab purchase packet requesting SBA honor the guaranty. 

If you have any questions, please contact:

 

Additional Information:



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