Post-PPP Portfolio Management

By Connor Mulvey, Vice President–Business Development

1. We have a number of borrowers in our SBA Portfolio that have not done well over the last 18 months and the CARES Act payments have expired. Industries such as daycares, spas & salons, full-service restaurants, breweries, and bars are all collectively struggling. What are some proactive steps we can take to minimize any losses we may incur?

I would suggest now is the time to make sure your SBA loan files are compliant and up-to-date. Review your portfolio and identify the accounts where these types of industries are or will have issues in 2021 and early 2022.

If you have not completed a loan/file review now is the time. Windsor provides external file review and there are several very competent firms that will review the file for eligibility, underwriting and identify any missing key documents. It is also very important to get key compliant documents into the file before your borrower becomes less cooperative. Performing an external file review can not only identify exceptions that may result in a repair or denial, it can also identify systemic process flaws within your SBA processing, underwriting, closing and servicing functions.

2. We have a growing watch list of potential problems. When is a site visit required by the SBA?

The only time that the SOP 50 57 2 specifically requires a site visit is when a loan is put into liquidation. Other times when it is prudent to do a site visit include: - Prudent Servicing Standards – whatever your institution’s site visit policy is. - During consideration of a workout plan. - If there is a change in environmental risk. - During a payment deferment.

3. What should we do to prepare for a site visit? - Review the loan file, specifically collateral documents. - Complete new lien searches. - Determine the status of taxes – property, payroll, income. - Appraisal review – Does a new appraisal need to be ordered?

4. What needs to be addressed in the site visit? - Determine whether the property is occupied or vacant. - Assess if there is environmental risk. - Gather information for the preparation of a liquidation plan. - Evaluate the possibility of a workout with the borrower. - Repossess personal collateral, if appropriate. - Develop a plan for the Care and Preservation of the collateral including securing the property and making sure that you have insurance coverage on the collateral. - Evaluate if any repairs or cleanup are necessary on the property.

As prudent lenders, we must work with our borrowers to the extent we can. In the cases where we may have to go through liquidation, it is critical that our process, documentation, and staff know what to do should we need to ask for a Guaranty Purchase.

Windsor Advantage, LLC is the nation’s largest Government Guaranteed SBA and USDA Lender Service provider, based in Chicago with offices in Indianapolis IN, and Charleston, SC. Windsor manages over $1.8 billion in SBA and USDA servicing assets. IBA Preferred Vendor

For more information, please contact: Connor Mulvey Vice President–Business Development Windsor Advantage, LLC 444 N Wells St., Suite 201 Chicago, IL 60654 P:312-585-6596 | C:708.408.1820

SBA Notes of Interest

The CARES Act has supported thousands of SBA businesses since 2020 and the payment relief did not come soon enough. Nonetheless, many SBA borrowers may not survive once the SBA discontinues payment subsidy relief. We have been asked some very good questions relative to handling borrowers in 2021 and working out stressed portfolios.