13 C.F.R. § 120.524 When is SBA released from liability on its guarantee?
Title 13 - Business Credit and Assistance
(a) SBA is released from liability on a loan guarantee (in whole or in part, within SBA's exclusive discretion), if any of the events below occur: (1) The Lender has failed to comply materially with any of the provisions of these regulations, the Loan Guarantee Agreement, or the Authorization; (2) The Lender has failed to make, close, service, or liquidate a loan in a prudent manner; (3) The Lender's improper action or inaction has placed SBA at risk; (4) The Lender has failed to disclose a material fact to SBA regarding a guaranteed loan in a timely manner; (5) The Lender has misrepresented a material fact to SBA regarding a guaranteed loan; (6) SBA has received a written request from the Lender to terminate the guarantee; (7) The Lender has not paid the guarantee fee within the period required under SBA rules and regulations; (8) The Lender has failed to request that SBA purchase a guarantee within 120 days after maturity of the loan; (9) The Lender has failed to use required SBA forms or exact electronic copies; or (10) The Borrower has paid the loan in full. (b) If SBA determines, after purchasing its guaranteed portion of a loan, that any of the events set forth in paragraph (a) of this section occurred in connection with that loan, SBA is entitled to recover any money paid on the guarantee plus interest from the Lender responsible for those events. (c) If the Lender's loan documentation indicates that one or more of the events in paragraph (a) of this section may have occurred, SBA may undertake such investigation as it deems necessary to determine whether to honor or deny the guarantee, and may withhold a decision on whether to honor the guarantee until the completion of such investigation. (d) Any information provided to SBA prior to Lender's request for SBA to honor its guarantee shall not prejudice SBA's right to deny liability for a guarantee if one or more of the events listed in paragraph (a) of this section occur. (e) Unless SBA provides written notice to the contrary, the Lender remains responsible for all loan servicing ad liquidation actions until SBA honors its guarantee in full. Deferment, Extension of Maturity and Loan Moratorium
Title 13: Business Credit and Assistance
PART 120—BUSINESS LOANS
Subpart E—Loan Administration
§ 120.524 When is SBA released from liability on its guarantee?
