Notice2024-18377
Information on 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
August 16, 2024
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 decreasing the minimum maturity ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC) Pools by 300 basis points, to 89.0%. The minimum maturity ratio covers the estimated cost of the timely payment guaranty for newly formed SBA 7(a) loan pools. This update 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 89 Issue 159 (Friday, August 16, 2024)</title>
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[Federal Register Volume 89, Number 159 (Friday, August 16, 2024)]
[Notices]
[Pages 66750-66751]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18377]
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SMALL BUSINESS ADMINISTRATION
Information on SBA Secondary Market Program
AGENCY: U.S. Small Business Administration.
ACTION: Update 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 decreasing the minimum maturity
ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC)
Pools by 300 basis points, to 89.0%. The minimum maturity ratio covers
the estimated cost of the timely payment guaranty for newly formed SBA
7(a) loan pools. This update will be incorporated, as needed, into the
SBA Secondary Market Program Guide and all other appropriate SBA
Secondary Market documents.
DATES: The update will apply to SBA 7(a) loan pools with an issue date
on or after October 1, 2024.
ADDRESSES: Address comments concerning this Notice to David Parrish,
Chief Secondary Market Division, Office of Financial Assistance, U.S.
Small Business Administration, 409 3rd Street SW, Washington, DC 20416;
or <a href="/cdn-cgi/l/email-protection#2e4a4f58474a005e4f5c5c475d466e5d4c4f00494158"><span class="__cf_email__" data-cfemail="1e7a7f68777a306e7f6c6c776d765e6d7c7f30797168">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: David Parrish, Chief Secondary Market
Division, Office of Financial Assistance at (202) 205-6346; or
<a href="/cdn-cgi/l/email-protection#ff9b9e89969bd18f9e8d8d968c97bf8c9d9ed1989089"><span class="__cf_email__" data-cfemail="543035223d307a243526263d273c142736357a333b22">[email protected]</span></a>. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
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
[[Page 66751]]
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 Pool Assemblers may increase the difference between the shortest
and the longest remaining term of the guaranteed portions of loans in a
Pool by 3 percentage points (i.e., decreasing the minimum maturity
ratio by 300 basis points). SBA does not expect a 3-percentage point
decrease in the minimum maturity ratio to have an adverse impact on
either the program or the participants in the program. Therefore,
effective October 1, 2024, 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
89.0%.
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,
2024.
David Parrish,
Chief, Secondary Market Division.
[FR Doc. 2024-18377 Filed 8-15-24; 8:45 am]
BILLING CODE P
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