CFR > Title 13 - Business Credit and Assistance > CHAPTER I—SMALL BUSINESS ADMINISTRATION > PART 120—BUSINESS LOANS > SUBPART I—Risk-Based Lender Oversight (§120.1000 to §120.1600) > 120.1425—Grounds for enforcement actions—Intermediaries participating in the Microloan Program and NTAPs.

120.1425—Grounds for enforcement actions—Intermediaries participating in the Microloan Program and NTAPs.

(a) Agreement. By participating in the SBA Microloan or NTAP program, Intermediaries and NTAPs automatically agree to the terms, conditions, and remedies in this Part 120 as if fully set forth in their participation agreement and all other agreements jointly executed by the Intermediary or NTAP and SBA.
(b) Scope. SBA may undertake one or more of the enforcement actions listed in § 120.1540, or as otherwise authorized by law, if SBA determines that any of the grounds listed in paragraphs (c) through (e) of this section exist.
(c) Grounds in general— For any Intermediary or NTAP, grounds that may trigger enforcement action against the Intermediary or NTAP (regardless of its Risk Rating) include:
(1) Violation of any laws, regulations, or policies of the program; or
(2) Failure to meet any one of the following performance standards:
(i) Coverage of the service territory assigned by SBA, including honoring SBA's determined boundaries of neighboring intermediaries and NTAPs;
(ii) Fulfill reporting requirements;
(iii) Manage program funds and matching funds in a satisfactory and financially sound manner;
(iv) Communicate and file reports within six months after beginning participation in program;
(v) Maintain a currency rate of 85% or more for the Intermediary's SBA Microloan portfolio (that is, loans that are no more than 30 days late in scheduled payments);
(vi) Maintain a default rate in the Intermediary's Microloan portfolio of 15% or less of the cumulative dollars loaned under the program;
(vii) Maintain a staff trained in Microloan program issues and requirements; or
(viii) Any other reason that SBA determines may increase SBA's financial or program risk (for example, repeated Less Than Acceptable Risk Ratings (generally in conjunction with other indicators of increased risk) or indictment on felony or fraud charges of an officer, key employee, or loan agent involved with SBA programs for the Intermediary or NTAP).
(d) Additional grounds specific to Intermediaries. In addition to the grounds set forth in paragraph (c) of this section, SBA may take enforcement action against an Intermediary for:
(1) Failure to satisfactorily provide in-house technical assistance to Microloan clients and prospective Microloan clients; or
(2) Failure to close and fund a minimum of four Microloans annually.
(e) Additional grounds specific to NTAPs. In addition to grounds set forth in paragraph (c) of this section, SBA may take enforcement action against an NTAP for failure to show that, for every 30 clients for which the NTAP provided technical assistance, at least one client received a loan from the private sector.

Code of Federal Regulations

[73 FR 75521, Dec. 11, 2008]