NEW SBA Form 159 Notice 5000-18012 7 (a) & 504 Theresa.Hendrix@sba.gov

New SBA Form 159 SBA Form 159 purposes: Combined the 7(a) and 504 versions into one form to be used for both SBA loan programs. November 1, 2018 only new form to be accepted. SBA Form 159 purposes: Identify Agents Identify the fees and/or compensation paid to the Agents by or on behalf of a small business applicant. Statutory 15 U.S.C. 642, SE C 13CFR Parts 103 &120 SOP 50 10 for rules governing compensation of Agents or SBA Lenders in connection with an SBA loan. 2

Who Must Complete the SBA Form 159 Agent is paid by the SBA Lender or Applicant. SBA Lender and Applicant must complete and sign the SBA Form 159 in connection with the SBA loan application. Agent is paid by the applicant for assistance with the SBA loan application must complete and sign the SBA Form 159. Agent is paid by the SBA Lender, SBA Lender must complete the SBA Form 159 and both the SBA Lender and Applicant must sign. (Not the agent) SBA Lender MUST inform the Applicant IN WRITING they are not required to employ an Agent or Representative (including the SBA Lender) with the SBA loan application. 3

What Must Be Disclosed Loan packaging services performed by the SBA Lender or other third party Agents (including services by a LSP (7a only) or has an SBA-Approved Professional Services Contract (504 only) with the SBA Lender who is acting as a loan packager or referral agent employed by the Applicant; Financial statement preparation specifically for the loan application; and/or Consultant, Broker or Referral services paid by the Applicant, Lender or Third Party Lender (504) . 4

AGENTS SBA expects SBA Lenders to exercise due diligence and prudent oversight of their third party vendors, including Lender Service Providers (LSP) and other loan agents; Consulting, Broker or Referral. SBA will review evidence of such due diligence and oversight of such relationships when conducting lender oversight activities. Federally regulated Lenders are reminded that they must comply with the requirements of their primary Federal Financial Institution Regulator regarding third party vendors. For a Lender Service Provider, SBA reviews the written agreement between the Lender and the Lender Service Provider. SBA Form 159 (7a) is not required for the services provided by the Lender Service Provider to the Lender. (13 CFR § 103.5(c)) **Fees paid by the Lender to the Lender Service Provider cannot be passed onto the Applicant.**

Referral Agents (13 CFR § 103.1(f)): “Referral Agent” means a person or entity that identifies and refers an Applicant to a Lender or a Lender to an Applicant. The referral agent may be employed and compensated by either an Applicant or a SBA Lender. Each referral agent, including loan packagers, must disclose the name of its customer and all fees charged in connection with the SBA loan transaction on SBA Form 159(7a).

Lender Service Provider (13 CFR § 103.1(d)) “Lender Service Provider” means an Agent who carries out Lender functions in originating, disbursing, servicing, or liquidating a specific SBA business loan or loan portfolio for compensation from the Lender.: A SBA Lender may contract with a third party (Lender Service Provider (LSP)) to assist the Lender with one or more of these functions. However, the Lender itself, not the LSP, must be able to demonstrate that it exercises day-to-day responsibility for evaluating, processing, closing, disbursing, servicing, liquidating and litigating its SBA portfolio. (13 CFR § 120.410). SBA determines whether or not an Agent is an LSP on a loan-by-loan basis. If an Agent meets the definition of an LSP, a formal written agreement between the Agent and SBA Lender is required and must be reviewed by SBA. All participating Lenders must submit each LSP agreement to the LGPC for review. Lenders may submit the agreements to LSPagreements@sba.gov. If there are any changes to an LSP agreement after review by SBA, the Lender must submit the revised agreement to SBA for review.

SBA will investigate any complaint by an Applicant, SBA Lender or any other participant in an SBA program, concerning the activity, services completed, or fees charged by any LSP. SBA reserves the right to audit compliance with any SBA-reviewed LSP agreement. For Lender Service Provider, SBA reviews the written agreement between the SBA Lender and the Lender Service Provider, thus SBA Form 159(7a) is not required for the services provided by the Lender Service Provider to the Lender. (13 CFR § 103.5(c)) Fees paid by the SBA Lender to the Lender Service Provider cannot be passed onto the Applicant. SBA Lender must ensure Agent is not debarred, suspended, ineligible or excluded from doing business with the Government (www.sam.gov); Separate form for each Agent (including SBA Lender when charging packaging fees); however, all services provided by the same Agent may be listed on a single form. The Agent may not be compensated by both the Applicant and SBA Lender for the same service. Any Agent employed by the SBA Lender must be paid by the SBA Lender and the fees cannot be passed to the Applicant.

JSO – changed INC to USCIS

A. Percentage of Loan Amount: SBA FORM 159 FEES A. Percentage of Loan Amount: $50,000 or less - may not exceed 3% of the loan amount. $50,000 to the first $1,000,000 – may not exceed 2% of the loan amount Amounts over the first $1,000,000 – an additional ¼ percent may be added All fees over $2500 must be supported, documenting the work performed and documenting the time spent on each individual activity. The MAXIMUM fee that may be charged to an Applicant on a Percentage Basis Is $30,000. B. Fees for Packaging and other services charged on an hourly rate. 1. Fees must be reasonable and customary for the actual services performed. 2. There is NO maximum fee for fees charged on an hourly rate. 3. All fees over $2500 must be supported, documenting the work performed and the time spent on each activity (separately). A standard or flat fee charged to all Applicants is not acceptable. SOP 50 10 5 )J), Pg. 158-159

Other Requirements If the compensation exceeds $2,500, an Agent must provide supporting documents to include: * Detailed explanation of the work performed *The hourly rate and the number of hours worked on each activity, If the Applicant is charged for multiple applications, the fees are aggregated to establish the $2,500 with supporting documents with detailed explanation. SBA Lenders are required to retain the original Form 159 in the loan file. A copy of the completed Form 159 MUST be submitted to Fiscal Transfer Agent once after the initial disbursement in conjunction with the 1502 Report. Agent must be identified, all services listed and party paying fee and the amount paid must be disclosed.

Other Requirement - #2 Lender MUST ensure that the Agent is not debarred, suspended, ineligible or excluded from doing business with the Government (www.sam.gov) No contingency fees allowed. Separate SBA Form 159 for each Agent which includes the SBA Lender when charging packaging services. All services provided by the same Agent may be listed on a single SBA Form 159. Agent may not be compensated by both the Applicant and the SBA Lender for the same service. Agent employed by the SBA Lender must be paid by the SBA Lender and those fees cannot be passed on to the Applicant. If SBA determines any portion of the fees charged in connection to the application for or making of the loan are unreasonable or prohibited, the Agent agrees to refund the amount to the Applicant.

Notification and Questions SBA Field Offices must notify 7(a) SBA Lenders and Certified Development Companies about the updates to the forms. Questions concerning the Notice 5000-18012 , please contact the Lender Relations Specialist at the local SBA Filed Office.