Getting the guarantee purchased is important; that’s not new news!
What is news is that the new Universal Purchase Package, or UPP, is now a single package for all loan types.
That will make things easier, for sure – and as with anything new, there’s a learning curve. We have a few tips for you, but first, a very important point. SBA is actively working on updates to the UPP, so always check the SBA UPP website when you’re starting a new UPP. Otherwise, you risk using an outdated form – and you know what that leads to (yes: rework and delays).
Let’s review some key reminders, new requirements and best practice suggestions covered in the UPP breakout session at last month’s NAGGL conference.
Some UPPs must now be submitted to servicing centers for processing instead of to the LGPC. The criteria are: If the original loan amount was $500M or less, regardless of when the loan originated, the loan should be submitted to a servicing center as a 7(a) small loan. Similarly, if a 7(a) loan has a companion loan and the combined total is $500M or less, each of the UPPs should be submitted to a servicing center. Conversely, if a 7(a) loan has a companion loan and the combined total is over $500M, each of the UPPs should be submitted to the LGPC in Herndon, VA. NOTE: On tab 1, when you enter the original loan amount and choose the loan type, the tab should automatically fill in the center where the completed loan package should be submitted.
On Tab 2, if there were expenses subtracted from recovery, the Care and Preservation of Collateral tabs must be completed when submitting, in order to account for fees deducted from the gross recovery. Still on Tab 2, when describing liquidation plans or actions taken, if the lender has a problem loan report, details can be pulled from this report and used to provide the necessary details regarding actions taken as well as the current status of the liquidation process.
On Tab 4, when completing the fields for interest rate, you must not enter 5.25% as 5.25. Instead, enter it as .0525.
If a loan is in liquidation status and payments are coming in, they must be applied to principal unless there’s an approved workout or other agreement that states payments may be applied some other way.
There is currently no option for a guarantor to be called a limited guarantor in UPP tab dropdown list. For now, just choose “guarantor,” and note in the package that it’s a limited guarantor. Since the guarantee form must also be submitted, it will be clear when a guarantor is a limited guarantor.
No post-default site visit is needed when the Business Personal Property value is less than $5M, or when the Real Estate value is less than $10M, or when the loan is unsecured.
As always, we’re here to help. If you have questions about these tips, or need help training your people on the new UPP (or any other SBA topic) – let us know! Call us at 877.576.0819, or email us through our Contact form. The new UPP is certainly simpler than the old process, yet, as we noted above, there’s always a learning curve when doing something new!