Notice2021-18858
Change to SBA Secondary Market Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 1, 2021
Issuing agencies
Small Business Administration
Abstract
The purpose of this Notice is to inform the public that the Small Business Administration (SBA) is making a change to its Secondary Market Loan Pooling Program. SBA is increasing the minimum maturity ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC) Pools by 400 basis points, to 93.0%. The change described in this Notice is being made to cover the estimated cost of the timely payment guaranty for newly formed SBA 7(a) loan pools. This change will be incorporated, as needed, into the SBA Secondary Market Program Guide and all other appropriate SBA Secondary Market documents.
Full Text
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<title>Federal Register, Volume 86 Issue 167 (Wednesday, September 1, 2021)</title>
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[Federal Register Volume 86, Number 167 (Wednesday, September 1, 2021)]
[Notices]
[Page 49087]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-18858]
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SMALL BUSINESS ADMINISTRATION
Change to SBA Secondary Market Program
AGENCY: U.S. Small Business Administration.
ACTION: Notice of change to secondary market program.
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SUMMARY: The purpose of this Notice is to inform the public that the
Small Business Administration (SBA) is making a change to its Secondary
Market Loan Pooling Program. SBA is increasing the minimum maturity
ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC)
Pools by 400 basis points, to 93.0%. The change described in this
Notice is being made to cover the estimated cost of the timely payment
guaranty for newly formed SBA 7(a) loan pools. This change will be
incorporated, as needed, into the SBA Secondary Market Program Guide
and all other appropriate SBA Secondary Market documents.
DATES: This change will apply to SBA 7(a) loan pools with an issue date
on or after October 1, 2021.
ADDRESSES: Address comments concerning this Notice to John M. Wade,
Chief Secondary Market Division, U.S. Small Business Administration,
409 3rd Street SW, Washington, DC 20416; or <a href="/cdn-cgi/l/email-protection#6802070006461f090c0d281b0a09460f071e"><span class="__cf_email__" data-cfemail="d9b3b6b1b7f7aeb8bdbc99aabbb8f7beb6af">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: John M. Wade, Chief, Secondary Market
Division at 202-205-3647; or <a href="/cdn-cgi/l/email-protection#214b4e494f0f56404544615243400f464e57"><span class="__cf_email__" data-cfemail="1973767177376e787d7c596a7b78377e766f">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Secondary Market Improvements Act of
1984, 15 U.S.C. 634(f) through (h), authorized SBA to guarantee the
timely payment of principal and interest on Pool Certificates. A Pool
Certificate represents a fractional undivided interest in a ``Pool,''
which is an aggregation of SBA guaranteed portions of loans made by SBA
Lenders under section 7(a) of the Small Business Act, 15 U.S.C. 636(a).
In order to support the timely payment guaranty requirement, SBA
established the Master Reserve Fund (MRF), which serves as a mechanism
to cover the cost of SBA's timely payment guaranty. Borrower payments
on the guaranteed portions of pooled loans, as well as SBA guaranty
payments on defaulted pooled loans, are deposited into the MRF. Funds
are held in the MRF until distributions are made to investors
(Registered Holders) of Pool Certificates. The interest earned on the
borrower payments and the SBA guaranty payments deposited into the MRF
supports the timely payments made to Registered Holders.
From time to time, SBA provides guidance to SBA Pool Assemblers on
the required loan and pool characteristics necessary to form a Pool.
These characteristics include, among other things, the minimum number
of guaranteed portions of loans required to form a Pool, the allowable
difference between the highest and lowest gross and net note rates of
the guaranteed portions of loans in a Pool, and the minimum maturity
ratio of the guaranteed portions of loans in a Pool. The minimum
maturity ratio is equal to the ratio of the shortest and the longest
remaining term to maturity of the guaranteed portions of loans in a
Pool.
Based on SBA's expectations as to the performance of future Pools,
SBA has determined that for pools formed on or after October 1, 2021,
SBA Pool Assemblers may decrease the difference between the shortest
and the longest remaining term of the guaranteed portions of loans in a
Pool by 4 percentage points (i.e., increasing the minimum maturity
ratio by 400 basis points). SBA does not expect a 4 percentage point
increase in the minimum maturity ratio to have an adverse impact on
either the program or the participants in the program. Therefore,
effective October 1, 2021, all guaranteed portions of loans in Standard
Pools and WAC Pools presented for settlement with SBA's Fiscal Transfer
Agent will be required to have a minimum maturity ratio of at least
93.0%. SBA is making this change pursuant to Section 5(g)(2) of the
Small Business Act, 15 U.S.C. 634(g)(2).
SBA will continue to monitor loan and pool characteristics and will
provide notification of additional changes as necessary. It is
important to note that there is no change to SBA's obligation to honor
its guaranty of the amounts owed to Registered Holders of Pool
Certificates and that such guaranty continues to be backed by the full
faith and credit of the United States.
This program change will be incorporated as necessary into SBA's
Secondary Market Guide and all other appropriate SBA Secondary Market
documents. As indicated above, this change will be effective for
Standard Pools and WAC Pools with an issue date on or after October 1,
2021.
John M. Wade,
Chief, Secondary Market Division, Office of Capital Access.
[FR Doc. 2021-18858 Filed 8-31-21; 8:45 am]
BILLING CODE P
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