SBA SOP 50 10 8, A.Ch4.E.4 — Use of Agents in the 504 Loan Program

SOP 50 10 8 A.Ch4.E.4

Effective 2025-06-01 · publisher's stamp for this provision

4. Use of Agents in the 504 Loan Program SBA expects CDCs to exercise due diligence and prudent oversight of their third party vendors, including professional service contractors and other loan agents, which should include having written policies governing such relationships and monitoring performance of loans referred by an Agent or where an Agent provided assistance. SBA will review evidence of such due diligence and oversight of such relationships when conducting CDC oversight activities. SBA regulations at 13 CFR Part 103 govern the activities of Agents, the disclosure of fees, and the circumstances that would result in revocation or suspension of the Agent’s privilege to conduct business with SBA. In 13 CFR § 103.1(a), SBA defines an “Agent” to mean an authorized representative, including an attorney, accountant, consultant, packager, lender service provider, or any other person representing an Applicant or participant by Conducting Business with SBA. Note: The term Agent in 13 CFR § 103.1(a) includes Lender Service Providers, which are used only in the 7(a) Loan Program. Professional Services Contractors are used in the 504 Loan Program and are described in paragraph 5. below. For individuals or entities operating under a professional services contract with a CDC, SBA approves the written agreement or contract with the CDC and the SBA Form 159 is not required. (13 CFR §§ 103.5(c) and 120.824) (Professional Services Contracts are used under the 504 Program rather than Lender Service Provider Agreements. See Paragraph 6.a. Professional Services Contractors, below, for guidance on professional service contracts.) Fees paid by the CDC in accordance with the professional services contract cannot be passed onto the Applicant. For all other Agents, paid by either an Applicant or a CDC, an SBA Form 159 must be completed and signed by the Applicant, the CDC, and the Agent. See Paragraph 6. Disclosure of Fees – SBA Form 159, below, for more information on SBA Form 159. The only situation where an Agent can receive compensation from both the CDC and the Applicant is when the Agent is providing different services by providing packaging services to the Applicant and receiving a referral fee from the CDC. The SBA does not allow contingency fees (fees paid only if the loan is approved or closed) or charges for services which are not reasonably necessary in connection with an application. The Director of SBA’s Office of Credit Risk Management (D/OCRM) may, for good cause, suspend or revoke the privilege of an Agent to conduct business with the government. The suspension or revocation will remain in effect during any administrative proceedings under SBA regulations at 13 CFR Part 134. The meaning of “good cause” can be found at https://www.ecfr.gov/current/title- 13/chapter-I/part-103#103.4. Agents and Privacy Act Considerations: Private information about a loan cannot be discussed with anyone who claims to be an Agent for an Applicant or CDC without evidence of representation. Proprietary information is protected by the Right to Financial Privacy Act and the Privacy Act. Without proper authorization, SBA and CDCs may not discuss private information with even a spouse or other close relative of the Applicant. SBA may require that an Agent supply written evidence of their authority to act on behalf of an applicant or CDC as a condition of revealing any information about the applicant’s or CDC’s current or prior dealings with the SBA.

Source: SBA SOP 50 10 8, A.Ch4.E.4 — Use of Agents in the 504 Loan Program · source URL · snapshot 535743ffe062cc34