Full text
SBA Information Notice
TO: All SBA Employees and 7(a) Lenders CONTROL NO.: 5000-856113
SUBJECT: Issuance of SOP 50 57 3.1 EFFECTIVE: September 17, 2024
In May of 2023, SBA announced the publication of Standard Operating Procedure (SOP) 50 57
3, 7(a) Loan Servicing and Liquidation, which became effective on August 1, 2023. Since then,
Agency staff has received and reviewed questions and comments from the public, including
participating lenders and representatives of various trade associations regarding the SOP.
Because of this feedback, SBA has made technical corrections to clarify the SOP, some of which
are identified below, which will result in the issuance of SOP 50 57 3.1 with an effective date of
December 1, 2024. The page numbers shown below correspond to the page numbers in SOP 50
57 3.1 posted on SBA’s website.
Chapter 2. Definitions
Page 29 and 30, Paragraph A.54.b and A.54.c: Revised to “7(a) Loans of $500,000 or less
including…” to clarify where Lenders should submit Servicing Requests for Loans in
liquidation status.
Chapter 3. Lender Responsibility and Authority
Page 35, Paragraph C.3.h.: Regarding the release of Obligors in Loan assumption
transactions, added “for Loans that are in payment Default or liquidation only. (See Chapter
11 of this SOP for additional guidance.)” at end of this section, and the related sections in
Chapter 8, Paragraph D. on page 76 and Paragraph I. on page 78; and Chapter 11, Paragraph
A.11. on page 88.
Page 36, Paragraph C.4.b.: Added “or SBA Legal Counsel” after “USEAC”, to reflect
appropriate SBA Legal Counsel review of Lender Servicing Requests that involve Lender
Litigation Plans and/or Debt Collection Litigation Expenses.
Page 37, Note Box: Replaced the contents of Note Box with: “Note: The appropriate SBA
District Counsel or Center Counsel will make a determination on all Lender Servicing
Requests that involve Lender Litigation Plans, Debt Collection Litigation Expenses and other
legal expenses. SBA Loan Centers will decide all other Lender Servicing Requests. SBA
Loan Centers, Center Counsel or SBA District Counsel should respond to Lender Servicing
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
requests within 15 business days from the date SBA receives the Servicing Request. (See 13
C.F.R. §120.541 for additional guidance.)”, to provide SBA Loan Centers with the flexibility
to review Lender Servicing Requests that do not require SBA District Counsel review.
Page 38, Paragraph C.6.b.: Expanded this section to include the appeal of SBA Center
Counsel decisions on Litigation Plans, Debt Collection Litigation Expenses and other legal
expenses. Added “Lenders should submit such requests to the appropriate SBA Loan Center
for tracking purposes.” at end of paragraph, to clarify how Lenders may appeal the decision of
an SBA Center or District Counsel regarding a Litigation Plan, Debt Collection Litigation
Expenses and other legal expenses.
Page 44, Paragraph F.4.a.(1): Deleted requirement for Lenders to submit Litigation Plan
status updates and replaced it with guidance for the submission of amendments to SBA
approved Litigation Plans. It is noted that Lenders must still include updates on liquidation
activities and litigation proceedings in the periodic Loan status reports they submit to the
appropriate SBA Loan Center every six months, beginning six months from the date of
guaranty purchase, until the Loan is paid in full or the Lender submits a Wrap-up Report,
acceptable to SBA. (See Chapter 24 Paragraph E of this SOP for guidance on Prudent
Liquidation Deadlines and other requirements for SBA guaranty purchased Loans.)
Chapter 4. Loan Payment Administration
Page 51, Note Box: Added “, or designee,” after “D/OFPO” and “D/OFA”, to provide
flexibility for those SBA officials to delegate authority for determining whether a prepayment
is voluntary or involuntary for subsidy recoupment fee applicability purposes.
Chapter 8. Modification of Collateral
Page 76, Paragraph D: Added “or Assumption of Personal Guaranty” after “Substitution of
Guarantor”, to align the guidance for assuming a personal guaranty for a 7(a) loan with the
guidance for substituting guarantors.
Chapter 11. Assumption, Assignment or Sale of Loan
Page 89, Note: Box: Added “(See Chapter 8, Paragraph D of this SOP for guidance on the
assumption of personal guaranties.)”.
Chapter 14. Special Purpose Loans
Page 121, Paragraph F.7.c: Added “SBA expects Lenders to accept and make a decision on
any PPP Loan forgiveness application submitted by a Borrower within five years from the
date that SBA issued the PPP Loan number to the Lender. To the extent that any PPP Loan
Borrower has received an extension of its maturity date for a period longer than five years,
that Borrower must submit its Loan forgiveness application on or before five years from the
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SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
date that SBA issued the PPP Loan number to the Lender. SBA is imposing this five-year
PPP Loan forgiveness deadline because extensions of maturity beyond five years for PPP
Loans are allowed only to aid in the orderly repayment of the Loan.”.
Chapter 22. Litigation
Page 179, Paragraph C.3.a.(1): Added “(See Chapter 2, paragraph 12 of this SOP for the
definition of Debt Collection Litigation Expenses.)” at end of paragraph.
Chapter 24. Loan Guaranty Purchase Requests
Page 201, Paragraph D.5.a.(1) and (2): Clarified the $500,000 Loan threshold (including
companion Loans to the same Borrower) for where to send Universal Purchase Packages.
Chapter 25. Denial of Liability on 7(a) Loan Guaranty
Page 211, Paragraph G.6.a.: Replaced with: “If a Lender requires an equity injection and as
part of its standard processes for similarly-sized, non-SBA guaranteed commercial loans
verifies the equity injection, it must do so for its SBA Loans. However, the Lender may use
its discretion to reduce the amount of equity and/or equity injection required if it determines
that the applicant needs leverage that exceeds the Lender’s conventional requirements. If a
Lender does not require an equity injection as part of its standard processes for similarly-sized
non-SBA guaranteed commercial loans, SBA will not require the Lender to do so for its SBA
loans. Lenders that only make SBA Loans must document their compliance with the policies
they submitted to SBA in conjunction with their application to become an SBA Lender. For
Loans that finance a change in the ownership of a business, Lenders must provide evidence that
the equity injection satisfies SBA requirements for such Loans. (See SOP 50 10 for additional
guidance.)”, to clarify the conditions under which SBA requires evidence of a required equity
injection.
Page 213, Paragraph G.6.f.(3): Deleted all examples of equity injection sources and retained
the requirement for Lenders to use the same processes they use to verify equity injections for
their similarly-sized, non-SBA guaranteed commercial loans.
Chapter 27. Lender Wrap-up and SBA Charge Off
Page 220, Paragraph B.1.a.: Replaced “Loan Documents” with “Loan Note, personal
guarantees, and any judgments” to specify the documents that Lenders must assign to SBA
and include in the Wrap-up Reports they submit to SBA.
Page 222, Paragraph D.2.a: Replaced “Loan Documents” with “Loan Note and any personal
guarantees or judgments” to specify the documents that Lenders must assign to SBA and
include in the Wrap-up Reports they submit to SBA. Deleted the requirement for Lenders to
provide evidence of the recordation of assignments, judgments and all other documents for
remaining collateral, in their Wrap-up Reports.
PAGE 3 of 4 EXPIRES: 9-1-25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office. Local SBA Field Offices can be found at https://www.sba.gov/tools/local-
assistance/districtoffices.
Jihoon Kim
Director
Office of Financial Program Operations
PAGE 4 of 4 EXPIRES: 9-1-25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper