If an SBA loan defaults, the Lender must submit a purchase request to the SBA National Guaranty Purchase Center (NGPC) in order to recover the guaranteed portion of the loan.  NGPC requires lenders to submit their request using SBA's 10-Tab 7(a) guarantee purchase package system.  On January 22, 2010, NGPC released an updated version of these tabs.  The changes incorporate the additional requirements contained in the American Recovery and Reinvestment Act ("Act") for all loans approved by the SBA on or after February 17, 2009.  The updated tabs can be found at here. 

Below is a summary of the changes that apply to all 7(a) Recovery Act loans:

• Tab 2 - Loan Authorization
  • The Loan Authorization must contain the additional documentation requirements, restrictions and mandatory certifications required by the Act:
    • Language pertaining to compliance with immigration laws;
    • Borrower certification of hiring practices for loans made under Section 502 of the Act; and
    • Allowable uses of Act funds for loans made under Sections 501 and 502 of the Act.
• Tab 3 - Eligibility
  • Lenders must submit Borrower and/or Operating Company certifications, executed prior to loan disbursement, of compliance with immigration laws and hiring practices.
  • Lenders must include applicable eligibility questionnaires and checklists certifying that no proceeds will be used for a restricted use.
• Tab 5 - Settlement Sheets
  • For loans containing working capital proceeds, Lenders must provide the executed certification from the Borrower and/or Operating Company attesting that no working capital funds will be used for restricted purposes.
  • For loans used to fund a Project with Restricted Uses, Lenders must provide:
    • Credit Memorandum (even if the loan is not an early default) documenting:
      • Use of proceeds do not include financing restricted uses; and
      • Other resources that cover the financing component of restricted uses.
    • Borrower and/or Operating Company mandatory certification, executed prior to first disbursement, that alternate funding proceeds have been obtained to finance restricted uses of the project
• Tab 10 - General Information
  • If a Lender received fee refunds from SBA on an eligible loan approved by SBA on or after February 17, 2009 and before March 16, 2009, Lender must provide documentation showing borrower's receipt of the refund.

Questions about the updated guaranty purchase package tabs can be directed to Annie Johnson at Starfield & Smith, P.C. at 215.542.7070 or ajohnson@starfieldsmith.com.