Disclosure of Assessment Category

10. Disclosure of Assessment Category

Assessments are disclosed to the SBA Lender in the Report, which will include the assessment category assigned and its basis. SBA Lenders are reminded that assessment ratings are summaries generated primarily for SBA’s internal use. The condition, effect and Corrective Actions necessary are described in the Report. Disclosure of Report assessments or the Report to any other entities and/or individuals is strictly prohibited and the lender must comply with SBA Loan Program Requirements and agreements concerning the confidentiality of the assessments and the Report.

11. Use of Review/Examination Results

The Report and the assessment category assigned are used by SBA, in conjunction with SBA’s L/LMS quarterly calculated risk ratings, to assist SBA in making determinations regarding an SBA Lender’s participation in SBA programs. The assessment category may be a factor in the final risk rating assigned by SBA to an SBA Lender.

12. On-Site Lender Review/Examination Process

In conducting on-site risk-based reviews/examinations, SBA assesses existing SBA loan program policies, procedures, management reports and other information provided by the SBA Lender; holds discussions with management and other personnel involved in the SBA loan program; reviews a sample of loan files to assess an SBA Lender’s adherence to its own and SBA’s lending requirements, including application of a prudent lending standard. While reviews/examinations generally cover all of the components described in the applicable chapters of this SOP, the scope can vary from SBA Lender to SBA Lender, depending upon the nature and performance of an SBA Lender’s SBA lending operation. Review/examination planning allows the EIC and reviewers to emphasize those areas where more risk to SBA appears possible.

a. Review/Examination Team

On-site reviews/examinations are conducted by the Office of Lender Oversight utilizing SBA staff and/or contract resources. OLO is responsible for the overall management of the review/examination process. Each on-site review/examination is managed by an SBA Senior Examiner (SBA employee) and led by the EIC assigned to the specific review/examination. The EIC is accompanied by a team of reviewers. The EIC plans the review, manages the on-site activities and prepares the Report.

b. Review/Examination Scheduling and SBA Lender Notification

The SBA review and examination schedules are generally outlined for an annual period and scheduled for three to six months in advance based upon the review/examination cycle and the risk characteristics of individual SBA Lenders. Managing the review/examination process efficiently requires careful preparation by the EIC and review team, as well as the SBA Lender. SBA generally provides a lender with 30-60 days advance notice, in writing, of an upcoming on-site review/examination. This approach allows for adequate planning, while providing SBA with the flexibility needed to make scheduling adjustments due to changed SBA Lender circumstances that may necessitate accelerating the need for a review/examination. Whenever practical, SBA, within its discretion, will make reasonable efforts to accommodate the needs of the SBA Lender when scheduling conflicts arise.

Anticipated timing of the entrance conference;

A request for information to be provided to the EIC prior to the start of the review/examination for planning purposes;

Deadline for requested information to be submitted to the EIC;

Date by which the SBA Lender will receive the list of individual loan files selected for review/examination during the on-site visit;

Date by which the SBA Lender will receive a list of additional information and materials that must be available at the start of the review/examination;

On-site logistical information, e.g., on-site location, number of examiners, space required, telephone, internet needs; and

SBA Senior Examiner.

c. Scope of the Review/Examination

The scope of an on-site review/examination includes analysis of the identified components and any follow-up on actions taken by the SBA Lender to correct any weaknesses noted in previous reviews/examinations. SBA reserves the right to conduct targeted or limited scope reviews/examinations, including ad hoc reviews, additional monitoring activities, special performance assessments or reviews/examinations as deemed necessary by the AA/OLO or designee. In the case of a targeted or modified on-site review/examination, the scope is defined by the specific objective of the review/examination, and limited to evaluation of those areas needed to achieve it. These activities will be governed by identified objectives, needs or situations that SBA determines necessary and required to fully assess and understand a lender’s risk characteristics.

d. Review/Examination Planning

The AA/OLO shall designate an SBA Senior Examiner as the primary SBA point of contact for each review/examination. This Senior Examiner analyst shall be responsible for:

Communications with the team that will conduct all review/examination activities;

Compilation of all internal SBA data and information for use by the team;

Providing technical guidance on SBA policy and procedure issues to all team members; and

e. Review/Examination Plan Responsibility and Preparation

The EIC is responsible for the preparation of the Plan. The process begins approximately 60 days prior to commencement of on-site activities with verbal and written communications with the SBA Lender and commencement of the development of the Plan by the EIC. The EIC should note any information regarding changes in SBA policy direction by the SBA Lender, key staff changes, and letters and memoranda regarding any actions the SBA Lender may have taken following the last review.

The final Plan must be completed prior to the commencement of the on-site activities, inclusive of the lead sheets that direct individual component review/examination activities. The Plan is then reviewed and approved by the AA/OLO or designee. Substantive changes to the Plan must be approved in advance by the AA/OLO or designee.

f. Sources of Information for Plan Development

The EIC should, as applicable to the SBA Lender’s status, develop the following information to assist in the preparation of the Plan:

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  The most recent portfolio performance data;
  
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  Any prior SBA Lender review and SBA Lender’s response to same, including any follow-up actions;
  
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  Information provided by the SBA Lender;
  
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  Guaranty Loan Status and Remittance Reports (SBA Form 1502) filed by the SBA Lender since the last review;
  
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  Internal audits conducted on the SBA lending program;
  
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  Regulatory examination reports, to the extent the SBA Lender is authorized to provide the information to SBA (or certification of SBA Lender that it is in good standing with Federal and state regulators and not subject to any agreements, Memorandums of Understanding (MOU) or any other type of supervisory or enforcement action);
  
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  Results of all searches relative to regulatory actions;
  
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  Results of the internet search for information available concerning SBA Lender announcements and publicized activities relevant to the review components;
  
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  Data and information resulting from off-site reviews/monitoring;
  
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  Any internal SBA reports or tracking;
  
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  SBA reports and analysis developed in response to field contact with the SBA Lender; and
  
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  Letters and memoranda documenting communications with the SBA Lender since the previous review.