There are hundreds of pages of SBA rules and regulations that must be carefully complied with. At CGS Financial Services, we keep up to date on those rules and all changes that occur/arise. We concentrate on providing advice to bank and nonbank lenders on the requirements as well as on complex legal and factual issues related to:
- Financial transactions.
- Loan administration.
- Environmental and American Recovery and Reinvestment Act Loans.
We conduct escalated legal review, issue guidance and provide final opinions in writing. We review in detail loan files submitted by both the secondary market and directly from participating banks in order to determine when SBA is legally obligated to honor its guaranty.
Government guaranteed loan services to lenders
In order to obtain a section 7(a) government guaranteed loan, the business must be for profit, domiciled in the U.S. and pay U.S. taxes. The program is based on the premise that if the government provides loans to assist businesses become successful, businesses will in turn help its community to thrive by providing products, services and jobs.
In order to inspire lenders to provide loans to businesses, which must be of a certain size based on the number of employees or gross receipts, the government guarantees lenders will be paid 85 to 90 percent of the loan even if the business defaults and is unable to repay the loan. This incentive may inspire some lenders to overlook credit unworthiness of applicants. At CGS Financial Services, LLC, we assist bank and nonbank lenders in many ways.
We provide all lenders detailed assistance with all aspects of SBA Guaranteed Government Loans. We manage the process and work diligently to maximize profits while decreasing the risk. We evaluate borrowers for SBA compliance and to determine credit-worthiness in order to decrease the number of defaults. Some specific areas in which we assist include, but are not limited to:
- Guidance to lenders so they can maximize their return on SBA Government Loans.
- Assist lenders in becoming part of the SBA Preferred Lenders Program (PLP) which delegates final credit decision making to the lender as well as servicing and liquidation authority. Becoming a PLP lender requires a complicated application process with which CGS Financial Services will assist.
- Provide services and support to lenders for selling SBA loans on the secondary market. The bundling of SBA guaranteed loans by lenders and intermediaries and sale of loan packages in the secondary market provides leverage for lenders and transfers the risk to investors. We conduct due diligence which is a valuable commodity.
- We provide instruction and support in Guaranteed Loan Origination and Loan Liquidation. The SBA will guarantee up to 90 percent of the loan. Lenders can take advantage of quickly selling the guaranteed portion of the loan which gives them more money to make more loans. We can streamline the process which is essentially a win-win for the lender who receives the guaranteed amount immediately from the purchaser and the purchaser who receives the monthly payments and interest from the borrower.