[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR103]
[Page 22-24]
TITLE 13--BUSINESS CREDIT AND ASSISTANCE
CHAPTER I--SMALL BUSINESS ADMINISTRATION
PART 103_STANDARDS FOR CONDUCTING BUSINESS WITH SBA
Sec.
103.1 Key definitions.
103.2 Who may conduct business with SBA?
103.3 May SBA suspend or revoke an Agent's privilege?
103.4 What is ``good cause'' for suspension or revocation?
103.5 How does SBA regulate an Agent's fees and provision of service?
Authority: Secs. 5, 13, 72 Stat. 385, 394 (15 U.S.C. 634, 642).
Source: 61 FR 2681, Jan. 29, 1996, unless otherwise noted.
Sec. 103.1 Key definitions.
(a) Agent means 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.
(b) The term conduct business with SBA means:
(1) Preparing or submitting on behalf of an applicant an application
for financial assistance of any kind, assistance from the Investment
Division of SBA, or assistance in procurement and technical matters;
(2) Preparing or processing on behalf of a lender or a participant
in any of SBA's programs an application for federal financial
assistance;
(3) Participating with or communicating in any way with officers or
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employees of SBA on an applicant's, participant's, or lender's behalf;
(4) Acting as a lender service provider; and
(5) Such other activity as SBA reasonably shall determine.
(c) Applicant means any person, firm, concern, corporation,
partnership, cooperative or other business enterprise applying for any
type of assistance from SBA.
(d) Lender Service Provider means an Agent who carries out lender
functions in originating, disbursing, servicing, or liquidating a
specific SBA business loan or loan portfolio for compensation from the
lender. SBA determines whether or not one is a ``Lender Service
Provider'' on a loan-by-loan basis.
(e) Packager means an Agent who is employed and compensated by an
Applicant or lender to prepare the Applicant's application for financial
assistance from SBA. SBA determines whether or not one is a ``Packager''
on a loan-by-loan basis.
(f) Referral Agent means a person or entity who identifies and
refers an Applicant to a lender or a lender to an Applicant. The
Referral Agent may be employed and compensated by either an Applicant or
a lender.
(g) Participant means a person or entity that is participating in
any of the financial, investment, or business development programs
authorized by the Small Business Act or Small Business Investment Act of
1958.
Sec. 103.2 Who may conduct business with SBA?
(a) If you are an Applicant, a Participant, a partner of an
Applicant or Participant partnership, or serve as an officer of an
Applicant, Participant corporation, or limited liability company, you
may conduct business with SBA without a representative.
(b) If you are an Agent, you may conduct business with SBA on behalf
of an Applicant, Participant or lender, unless representation is
otherwise prohibited by law or the regulations in this part or any other
part in this chapter. For example, persons debarred under the SBA or
Government-wide debarment regulations may not conduct business with SBA.
SBA may request that any Agent supply written evidence of his or her
authority to act on behalf of an Applicant, Participant, or lender as a
condition of revealing any information about the Applicant's,
Participant's, or lender's current or prior dealings with SBA.
Sec. 103.3 May SBA suspend or revoke an Agent's privilege?
The Administrator of SBA or designee may, for good cause, suspend or
revoke the privilege of any Agent to conduct business with SBA. Part 134
of this chapter states the procedures for appealing the decision to
suspend or revoke the privilege. The suspension or revocation remains in
effect during the pendency of any administrative proceedings under part
134 of this chapter.
Sec. 103.4 What is ``good cause'' for suspension or revocation?
Any unlawful or unethical activity is good cause for suspension or
revocation of the privilege to conduct business. This includes:
(a) Attempting to influence any employee of SBA or a lender, by
gifts, bribes or other unlawful or unethical activity, with respect to
any matter involving SBA assistance.
(b) Soliciting for the provision of services to an Applicant by
another entity when there is an undisclosed business relationship
between the two parties.
(c) Violating ethical guidelines which govern the profession or
business of the Agent or which are published at any time by SBA.
(d) Implying or stating that the work to be performed for an
Applicant will include use of political or other special influence with
SBA. Examples include indicating that the entity is affiliated with or
paid, endorsed or employed by SBA, advertising using the words Small
Business Administration or SBA in a manner that implies SBA's
endorsement or sponsorship, use of SBA's seal or symbol, and giving a
``guaranty'' to an Applicant that the application will be approved.
(e) Charging or proposing to charge any fee that does not bear a
necessary and reasonable relationship to the services actually rendered
or expenses actually incurred in connection with a
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matter before SBA or which is materially inconsistent with the
provisions of an applicable compensation agreement or Lender Service
Provider agreement. A fee based solely on a percentage of a loan or
guarantee amount can be reasonable, depending on the circumstances of a
case and the services actually rendered.
(f) Engaging in any conduct indicating a lack of business integrity
or business honesty, including debarment, criminal conviction, or civil
judgment within the last seven years for fraud, embezzlement, theft,
forgery, bribery, falsification or destruction of records, false
statements, conspiracy, receiving stolen property, false claims, or
obstruction of justice.
(g) Acting as both a Lender Service Provider or Referral Agent and a
Packager for an Applicant on the same SBA business loan and receiving
compensation for such activity from both the Applicant and lender. A
limited exception to this ``two master'' prohibition exists when an
Agent acts as a Packager and is compensated by the Applicant for
packaging services; also acts as a Referral Agent and is compensated by
the lender for those activities; discloses the referral activities to
the Applicant; and discloses the packaging activities to the lender.
(h) Violating materially the terms of any compensation agreement or
Lender Service Provider agreement provided for in Sec. 103.5.
(i) Violating or assisting in the violation of any SBA regulations,
policies, or procedures of which the Applicant has been made aware.
Sec. 103.5 How does SBA regulate an Agent's fees and provision of
service?
(a) Any Applicant, Agent, or Packager must execute and provide to
SBA a compensation agreement, and any Lender Service Provider must
execute and provide to SBA a Lender Service Provider agreement. Each
agreement governs the compensation charged for services rendered or to
be rendered to the Applicant or lender in any matter involving SBA
assistance. SBA provides the form of compensation agreement and a
suggested form of Lender Service Provider agreement to be used by
Agents.
(b) Compensation agreements must provide that in cases where SBA
deems the compensation unreasonable, the Agent or Packager must: reduce
the charge to an amount SBA deems reasonable, refund any sum in excess
of the amount SBA deems reasonable to the Applicant, and refrain from
charging or collecting, directly or indirectly, from the Applicant an
amount in excess of the amount SBA deems reasonable.
(c) Each Lender Service Provider must enter into a written agreement
with each lender for whom it acts in that capacity. SBA will review all
such agreements. Such agreements need not contain each and every
provision found in the SBA's suggested form of agreement. However, each
agreement must indicate that both parties agree not to engage in any
sharing of secondary market premiums, that the services to be provided
are accurately described, and that the agreement is otherwise consistent
with SBA requirements. Subject to the prohibition on splitting premiums,
lenders have reasonable discretion in setting compensation for Lender
Service Providers. However, such compensation may not be directly
charged to an Applicant or borrower.