CDC/504 loan servicing

All unilateral servicing actions must be submitted to SBA. Please refer to the Servicing and Liquidations CDC Matrix for further details.

Certified Development Companies (CDCs) are expected to submit unilateral servicing actions to the appropriate Commercial Loan Service Center(CLSC). The PCLP/CDC Unilateral Action Notification  or the ALP/CDC Unilateral Action Notification may be used for this purpose. 

For all servicing actions, CDCs must document the justification for their decision and retain these and all supporting documents in their file for future SBA review to determine if the actions taken by the CDC were prudent, commercially reasonable, and complied with all loan program requirements. It is recommended that the CDC retain a copy of the matrix in effect at the time of the request and attach it to the action in their file.

CDCs are reminded that any action taken by the CDC that confers a preference or engages them in an activity that creates a conflict of interest requires prior written consent from the SBA. As defined in 13 CFR § 120.10, preference is any arrangement giving a CDC a preferred position compared to SBA relating to the making, servicing, or liquidation of a business loan with respect to such matters as repayment, collateral, guarantees, control, maintenance of a compensating balance, purchase of a Certificate of Deposit or acceptance of a separate or companion loan.

CDCs should submit servicing requests to the appropriate CLSC.

• A statement of the proposed action and abrief description of what makes the request necessary
• Status of the SBA loan (date and amount funded, current balance, and status)
• Identification of guarantors or co-makers and a statement as to whhether their consent has been or will be obtained for the action
• A summary and analysis of the business, including analysis of financial statements
• Before and after collateral analysis, for actions that affect the collateral
• Summary of prior servicing experience with the borrower such as loan modifications or problems pertinent to the request
• A summary of the impact or benefit of the action on the business
• A statement addressing how the proposed action addresses the needs or solves the problems of the business
• A statement addressing how action protects the interest of the CDC and SBA
• SBA requires all CDCs to prepare legal documents for SBA signature
• PCLP CDCs may use power of attorney for all assumption and subordination agreements
• A copy of the loan authorization and all amendments 

Additional guidance can be found in SOP 50 55, Chapter 6. For those CDC actions requiring SBA approval, the following documents may be submitted in order to facilitate review.

• PCLP/CDC Unilateral Action Notification
• ALP/CDC Unilateral Action Notification
• Power of Attorney Agreement 
• 504 Servicing Assumption Agreements 
• 504 Servicing Subordination Agreements

If you have any questions, please feel free to check out SOP 50 55, Chapter 6, or contact the appropriate Commercial Loan Service Center: