13 C.F.R. § 120.434 What are SBA's requirements for loan pledges?
Title 13 - Business Credit and Assistance
(a) Except as set forth in §120.435, SBA must give its prior written consent to all pledges of any portion of a 7(a) loan, which consent SBA may withhold in its sole discretion; (b) The Lender must be in good standing as determined by the AA/FA; (c) All loan documents must be satisfactory to SBA and must include a multi-party agreement among SBA, Lender, the pledgee, FTA and such other parties as SBA determines are necessary; (d) The Lender must use the proceeds of the loan secured by the 7(a) loans only for financing 7(a) loans and for costs and expenses directly connected with the borrowing for which the loans are pledged; (e) The Lender must remain the servicer of the loans and retain possession of all loan documents other than the original promissory notes; (f) The Lender must deposit the original promissory notes at the FTA; and (g) The Lender must retain an economic interest in and the ultimate risk of loss on the unguaranteed portion of the loans.
Title 13: Business Credit and Assistance
PART 120—BUSINESS LOANS
Subpart D—Lenders
§ 120.434 What are SBA's requirements for loan pledges?
