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Preferred Lender Programs

Written by: Start Your Business

Article Overview: The Preferred Lenders Program (PLP) is another step in SBA's process of "streamlining" the procedures necessary to provide financial assistance to the small business community. Under PLP, SBA delegates loan approval, closing, and most servicing and liquidation authority and responsibility to these carefully selected lenders. . (Lenders new to SBA should first read about becoming an SBA Lender) SBA will continue to check loan eligibility criteria under this program.

Preferred Lender Programs

The Preferred Lenders Program (PLP) is another step in SBA's process of "streamlining" the procedures necessary to provide financial assistance to the small business community. Under PLP, SBA delegates loan approval, closing, and most servicing and liquidation authority and responsibility to these carefully selected lenders. . (Lenders new to SBA should first read about becoming an SBA Lender) SBA will continue to check loan eligibility criteria under this program.

PLP lenders are nominated based on their historical record with the Agency. They must have demonstrated a proficiency in processing and servicing SBA-guaranteed loans. The credit criteria for PLP loans in the same as that for the CLP and/or the Regular 7(a) program. In the event of payment default by the borrower and the need for enforced collections, the PLP lender agrees to liquidate all business assets before asking SBA to honor its guaranty.

How to become a PLP Lender

To become a Preferred Lender, an SBA field office may nominate a Lender. A Lender may also request a field office to consider it for PLP status. The SBA field office will forward its recommendation to an SBA centralized loan processing center which will submit its recommendation and supporting documentation to the Associate Administrator of Financial Assistance (AA/FA) for final decision. In making its decision, SBA considers whether the Lender:

(1) Has the required ability to process, close, service and liquidate loans;
(2) Has the ability to develop and analyze complete loan packages; and
(3) Has a satisfactory performance history with SBA.

If the Lender is approved, the AA/FA will designate the area in which it can make PLP loans. Before it can operate as a PLP Lender, the approved Lender must execute a Supplemental Guarantee Agreement, which will specify a term not to exceed two years. When a PLP's Supplemental Guarantee

Agreement expires, SBA may recertify it as a PLP Lender for an additional term not to exceed two years. Prior to recertification, SBA will review a PLP Lender's loans, policies and procedures. The recertification decision of the AA/FA is final.

A PLP Lender may request an expansion of the territory in which it can process PLP loans by submitting its request to a loan processing center. The center will obtain the recommendation of each SBA office in the area into which the PLP Lender would like to expand its PLP operations. The center will forward the recommendations to the AA/FA for final decision. If a PLP Lender is not a CLP Lender in a territory into which it seeks to expand its PLP status, it automatically obtains CLP status in that territory when it is granted PLP status for the territory.

Because of the expanded authority and the expedited nature of the PLP program, certain loans can not be processed under the PLP Program. A PLP Lender should consult SBA’s SOP, and or the PLP Loan Processing Center for these guidelines.

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