SBA 504 program
CTC Consulting conducts a comprehensive Review of a CDC’s SBA 504 portfolio. It consists of the following four components.
Portfolio Performance
The portfolio performance analysis consists of an assessment of the CDC’s 504 portfolio to evaluate historical, current and projected performance. In addition, it identifies various risk characteristics of the portfolio.
Key elements include:
- Outstanding 504 portfolio;
- Delivery method performance characteristics;
- Loan Production Activity (debentures);
- Comparative performance rates analysis with overall SBA 504 portfolio and peer group performance rates;
- Repurchased Debentures;
- Industry concentrations and their risk implications;
- Geographical concentrations and their possible risk impact;
- Early Defaults;
- Predictive Indicators; and
- Any other segmentation of the portfolio with risk implications.
Management and Operations
It assesses the effectiveness of the CDC’s management of its 504 loan program.
Key elements include:
- CDC Organization;
- Regulatory Organizational Requirements;
- SBA training;
- Delegations of Authority;
- Strategic/Operating plan;
- Internal Oversight;
- External Oversight;
- Internal controls;
- CDC’s standing with the State of its incorporation; and
- Any other characteristics with risk implications.
Credit Administration
It assesses the CDC’s ability to evaluate, process, close, disburse, service and liquidate its SBA portfolio in accordance with SBA loan program requirements.
Key elements include:
- Determination of creditworthiness;
- Collateral analysis;
- Closing procedures;
- Regular servicing;
- On-going assessment of continued creditworthiness;
- Intensive servicing;
- Liquidations;
- Repurchased Debentures;
- Consistency with SBA policy;
- Risk Rating mechanism;
- Internal controls; and
- Loan agents.
Compliance
Participation in the SBA loan program imposes unique loan origination, servicing, liquidation, and reporting requirements on the CDC. The Review assesses CDC's compliance with all such requirements, which include:
- Eligibility;
- Reporting;
- Payments;
- Recovery Act; and
- Other compliance matters relating to servicing and liquidation etc.
Benefits of the Review
- Identification of any weaknesses or problem areas;
- Suggestions/Recommendations to ensure compliance with all SBA lending requirements; and
- Suggestions/Recommendations to improve overall efficiency of the loan operation.
