U.S. Small Business Administration - Office of Credit Risk Management 7(a) and Community Advantage Loan Program 7(a) Loan Servicing Contract

Added:Jul 01, 2019 2:04 pm Sources Sought Notice / Request For InformationU.S. Small Business Administration - Office of Credit Risk Management7(a) and Community Advantage Loan Program7(a) Loan Servicing Contract***THIS IS A SOURCES SOUGHT NOTICE / REQUEST FOR INFORMATION (RFI). THIS RFI IS RELEASED PURSUANT TO FEDERAL ACQUISITION REGULATION (FAR) PART 15.201 FOR MARKET RESEARCH PURPOSES ONLY. THIS ANNOUNCEMENT IS NOT A REQUEST FOR PROPOSALS (RFP) AND SHALL NOT BE CONSTRUED AS A COMMITMENT BY THE GOVERNMENT TO SEEK PROPOSALS OR AWARD A CONTRACT AT THIS TIME. ***1. SummaryTHIS IS A SOURCES SOUGHT NOTICE / REQUEST FOR INFORMATION. No solicitation is available at this time. The information will be utilized for FY 20-21 research purposes. This Sources Sought Request for Information is released pursuant to FAR Part 15.201(e), Exchanges with Industry.The United States Small Business Administration ("SBA") is currently in the acquisition planning stage for the eventual award of a services

contract for a contractor that will conduct on behalf of SBA all activities related to the servicing of 7(a) and Community Advantage loan portfolios in accordance and compliance with all applicable laws, SBA and other government requirements and customary industry servicing practices of prudent lending institutions. Services shall include, but not be limited to, transaction processing, customer service, statement generation, reporting, billing, repayment disbursements, management, administration, collection, and customer service.NAICS 522390 - Other Activities Related to Credit Intermediation - $20.52. Contract Type and Performance Period: The Small Business Administration is considering entering into an Indefinite Delivery Indefinite Quantity (IDIQ) contract. The contract period of performance shall be for a base year, with the availability of four option years.3. BackgroundThe Small Business Administration ("SBA") was created by the U.S. Congress in 1953 via the Small Business Act as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. As such, it is our mission to maintain and strengthen the nation's economy by enabling the establishment and vitality of small businesses and by assisting in the economic recovery of communities after disasters.SBA achieves its mission by increasing and improving American Small Businesses access to capital, federal contracting opportunities, entrepreneurial development, and disaster assistance. Programs are delivered through an extensive network of field offices, and partnerships with public and private organizations, throughout the United States, Puerto Rico, the U.S. Virgin Islands, and Guam.SBA's Office of Capital Access ("OCA") plays an important role in the achievement of SBA's mission by helping to make funding available through banks and other lending partners to small business that cannot otherwise obtain loans. This is delivered primarily by SBA's flagship 7(a) and 504 loan programs, as well as, its microloan and surety bond programs. OCA has responsibility over SBA's loan program policy, technology, operations and oversight.The SBA 7(a) Loan Program is authorized by section 7(a) of the Small Business Act and is governed by the regulations outlined in Parts 103, 105, 120, and 121 of Title 13 of the Code of Federal Regulations (CFR). This multi-purpose business loan program is administered as a deferred participation program where SBA guarantees a portion of the loan made by a Lender. The Lender initiates the loan to a small business and, if the SBA agrees to guarantee the loan, the Lender funds and services the loan. In the event of default, the Lender conducts the work-out or the liquidation efforts and the Lender and SBA share in the loss, if any, in accordance with the percentage guaranteed by the SBA.SBA's Office of Credit Risk Management ("OCRM") is a division of the Office of Capital Access charged with credit risk management of SBA's lending programs, including providing supervision for SBA Supervised Lenders. An SBA Supervised Lender is a 7(a) Lender that is either a Small Business Lending Company ("SBLC") or a Non-Federally Regulated Lender ("NFRL"). SBLCs are non-depository lending institutions that are SBA licensed and authorized by SBA to only make loans pursuant to section 7(a) of the Small Business Act and loans to Intermediaries in SBA's Microloan program. NFRLs are business concerns that are authorized by the SBA to make loans under section 7(a) and are subject to regulation by a state but whose lending activities are not regulated by a Federal Financial Institution Regulator. OCRM is also charged with risk management of SBA's Community Advantage ("CA") Pilot Program, a program which allows mission-oriented lenders, primarily non-profit financial intermediaries that are focused on economic development in underserved markets, access to 7(a) loan guaranties for loans of $250,000 or less. Each CA Lender will be identified as either an SBLC or an NFRL, depending on whether the lender is subject to regulation by a state.OCRM, from time to time, may take appropriate supervisory actions as determined by SBA against those Lending Partners that demonstrate unacceptable risk profiles and an inability or unwillingness to proactively or timely resolve the issues which create the unacceptable risk profile. Formal enforcement actions may require certain transfers of assets or servicing rights from the offending lender. It is in this vain that OCRM is seeking a contractor that will receive servicing rights of loans that have been transferred due to an SBA supervisory action. The contractor will conduct, on behalf of SBA, all activities related to the servicing of 7(a) and 7(a) Community Advantage loan portfolios in accordance and compliance with all applicable laws, SBA and other government requirements, and customary industry servicing practices of prudent lending institutions. Services shall include, but not be limited to, transaction processing, customer service, statement generation, reporting, billing, repayment disbursements, management, administration, collection, and customer service.4. Project Requirement4.1. Overview4.1.1. The Contractor shall provide to SBA general loan administration and collection services (i.e. loan servicing) for 7(a) and Community Advantage Loan portfolios appropriate to the type and status of the particular loan and consistent with SBA's Loan Program and Community Advantage Pilot Program policies and procedures, applicable Federal, State and Local laws and regulations, and prudent and commercially reasonable loan servicing practices in order to protect the interests of SBA and maintain program integrity.4.1.2. Contractor is responsible for servicing each 7(a) and Community Advantage Loan in a prompt, cost-effective and commercially reasonable manner, consistent with prudent lending practices and in accordance with SBA Loan Program and Community Advantage Pilot Program policies and procedures and shall be required to implement any new or revised policies or procedures issued during the term of the contract.4.1.3. The serviced 7(a) and Community Advantage Loans will vary in size, type, location, principal balance and documentation quality, and could likely contain unique, complex, and unusual servicing requirements relative to the nature of the Loans. Loans to be serviced under this contract may consist of Loans that are:4.1.3.1. Current loans, Past Due/Deferred/Delinquent loans, loans in liquidation, or active purchase loans.4.1.4. SBA shall determine in its sole discretion the size, type, location, quality, and number of Loans to be serviced by Contractor. Contractor shall be obligated to service all the Loans identified in the initial Task Order and any additional Task Orders. SBA may increase or decrease the number of Loans to be serviced. No minimum or maximum number of loans is guaranteed. Contractor shall be entitled to receive a monthly servicing fee as specified in the contract.4.1.5. Contractor shall perform its duties using its own facilities, equipment and personnel and shall maintain facilities, equipment and personnel so that the performance of these requirements are not impaired or delayed.4.1.6. The contractor must provide financial accounting in accordance with Generally Accepted Accounting Principles (GAAP) for loans in a portfolio which accounts for each component of the loan transaction.4.2. Loan Servicing TransfersSBA shall provide to the Contractor a list that shall identify the 7(a) Loans to be serviced by Contractor at the time of each Task Order. If necessary, as deemed by SBA, the Contractor, following the issuance of SBA enforcement orders, shall facilitate the transfer of loans to include integration of the loan documents and loan data into a servicing database as provided by the Contractor. The Contractor must also provide to SBA a complete report on loan deficiencies, issues that need to be addressed, and the actions the contractor will take for the ongoing servicing of the loans and compliance with 7(a) Loan Program Requirements.4.3. Initial Servicing Notices4.3.1. Hello Letter to Borrowers: Contractor shall provide to each Borrower a written notice advising the Borrower that Contractor is now servicing the Borrower's Loan. The notice must also include: the entity, location, and method to which the Borrower's future payments should be sent, the Borrower's unpaid principal balance, SBA's loan number, Contractor's loan number, the name and toll free or collect call phone number of a customer service representative to whom Borrower's inquiries may be addressed, and any other information required by applicable Federal, state and local laws and regulations.4.3.2. Other Notices: Contractor shall provide notice of service transfer to SBA's Fiscal Transfer Agent FTA, insurance companies, and any other agencies, participants or parties applicable to the relevant Loans.4.4. Collection and Application of Loan Payments4.4.1. The contractor is responsible for collecting scheduled loan payments and for crediting the payments to the proper account in accordance with SBA Loan Payment Administration requirements.4.4.1.1. This includes monthly debt service billing to borrowers for notes pursuant to their terms, timely collection of delinquent debt service payments and other payments using various means including individualized late and demand letters, phone calls, default notices, and preparation of Loan Payoff Statements and Payoff Letters.4.4.2. If the loan has been sold on the secondary market, the contractor must remit the guaranteed portion of regular loan payments to the SBA's Fiscal transfer Agent for distribution to the investor.4.4.3. The contractor must remit SBA's share of any post-guaranty purchase loan payment to the Agency via www.pay.gov within 15 business days of receipt, regardless of whether the loan was sold on the secondary market.4.5. Loan MonitoringAfter a loan has closed, changes often occur that can impact the ability to administer or collect the loan. They include, for example, a Borrower's name change, relocation, or consolidation with another entity; a deterioration in the Borrower's financial condition; and changes that affect the value of collateral, such as failure to pay real estate taxes that can become a senior lien on the collateral. The Contractor is responsible for monitoring each SBA loan in their portfolio and for mitigating the risk of loss associated with any change in accordance with Prudent Servicing and Liquidation practices and SBA Loan Requirements. The contractor shall:4.5.1. Monitor a borrower's creditworthiness, i.e., financial and operational condition, through the use of tools such as periodic submission of financial statements, contact with the Borrower via phone or site visits, or review of relevant financial data from sources such as credit reports, credit scores and tax returns. If the Loan Documents require the Borrower to submit financial statements, the statements should be reviewed and analyzed in a timely manner.4.5.2. Manage environmental risks associated with SBA loans in regular servicing or liquidation status by conducting adequate due diligence before taking any Loan Action that could result in a loss, or increase the risk of loss, due to actual or alleged presence of Contamination; by monitoring the loan for compliance with the environmental covenants in the Loan Documents, and requiring the Borrower to take appropriate corrective action if necessary; and ensuring compliance with Environmental Laws that allow secured creditors to avoid or significantly limit potential liability.4.5.3. Ensure that all servicing actions proposed are in accordance with:4.5.3.1. The terms and conditions in the SBA loan authorization and related instruments executed by the borrower;4.5.3.2. SBA Loan Program Requirements; and4.5.3.3. Applicable federal and state laws and practices.4.6. Loan Servicing RequestsFrequently after an SBA loan has been disbursed, circumstances change and give rise to Borrower Servicing Requests. They can range anywhere from a simple request to change a mailing address to a complicated request involving the exchange of collateral. Regardless of the level of complexity, all Servicing Requests must be reviewed, analyzed and acted upon in accordance with Prudent Servicing and lending practices. As long as the Borrower is viable, when responding to a Servicing Request, the goal should be to meet the Borrower's short- and long-term needs without impairing the integrity of the SBA loan program, i.e., the ability to recover on the loan.4.6.1. The Contractor must service the loan in accordance with Prudent Servicing and lending practices and SBA Servicing Requests requirements and follow the requirements of the SBA Servicing and Liquidation Actions 7(a) Matrix (Attachment B) for all servicing actions.4.7. LiquidationThe Contractor is responsible for liquidating all defaulted loans in liquidation or active purchase status and, if applicable, Past Due/Deferred/Delinquent loans, in a prompt, cost-effective and commercially reasonable manner, consistent with prudent lending practices and in accordance with SBA Loan Program Requirements.4.7.1. Unless otherwise authorized in writing by SBA, the Contractor must follow the requirements of the SBA Servicing and Liquidation Actions 7(a) Matrix (Attachment B) for all liquidation actions.4.8. LitigationContractor is responsible for conducting all litigation needed to ensure recovery on all of the SBA loans. [See Chapter 21 of SOP 50 57 2 (Attachment A) for more information on litigation]4.9. Recordkeeping4.9.1. All servicing and liquidation Loan Action decisions, including the justification for the decision, must be documented in the Loan File or Computer Tracking System.4.9.2. Loan Action Records should be dated and kept in the Loan File along with the Supporting Documents, such as Appraisals, credit reports and Environmental Investigation Reports, and any other document relied upon before taking the action memorialized in the Loan Action Record, including, for example, a copy of the Lender Servicing and Liquidation Actions 7(a) Lender Matrix.4.10. Loan File Content, Maintenance, and Security4.10.1. Loan Files: Contractor shall maintain a Loan File for each Loan being serviced. The use of Electronic Record Keeping systems to record information, data, and Documents shall be considered a part of the Loan File4.10.2. Maintenance of Historical Transaction Data: Contractor shall maintain a computerized data file of transaction history of each Loan to the extent it is provided to the Contractor for periods before Conversion Date, and for all periods subsequent to Conversion Date, and shall at all times protect and preserve the integrity of this historical data. This history shall be maintained on-line or be readily accessible via tape or other permanent storage medium. Historical data created after Conversion Date shall include at a minimum the nature and type of transaction, the posting date, the amount posted, and SBA's Loan number.4.10.3. Loan Documents: Contractor shall use its best efforts to obtain from the appropriate party or parties any missing portions of the Loan File, including any Promissory Note, endorsement or other document.5. Definitions5.1. SBA 7(a) Loan: The 7(a) loan program is the SBA's primary program for providing financial assistance to small businesses. The terms and conditions, like the guaranty percentage and loan amount, may vary by the type of loan. For the purposes of this solicitation, an SBA 7(a) loan includes all 7(a) loan types including but not limited to: Traditional, Small Loan, Express Loan, Community Advantage and Veterans Advantage.5.2. Prudent Servicing: means Lenders must service 7(a) loans in their portfolio no less diligently than their non-SBA portfolio, and in a commercially reasonable manner, consistent with prudent lending standards, and in accordance with Loan Program Requirements. Those lenders that do not maintain a non-SBA loan portfolio must adhere to the same prudent lending standards for loan servicing followed by commercial lenders on loans without a guarantee. (13 C.F.R. 120. 535(a))6. Industry ResponseAny interested firms should submit a Capability Statement that clearly demonstrates their ability to meet the Government's objectives and requirements. The Capability Statement should be no longer than 15 pages and a slide deck no longer than 20 slides. An appendix with supporting documentation may also be included, is not limited in length, and is not required except for #7 below.The submission should include: (In order as follows)1) Description and brief history of the company including the firms level of experience and with the type of loan servicing described above (Project Requirements 4.1 to 4.10).2) Description of services the firm or team can provide.a. Include a detailed description of how your firm may provide for the project requirements listed above. (Project Requirements 4.1 to 4.10)b. List and describe any additional value-added loan servicing activities or services your firm could provide that may not be captured in the project requirements listed above.3) Description of project approach and project management philosophy.a. How might your firm ensure that all SBA servicing requirements, applicable Federal, State and Local laws and regulations, and prudent and commercially reasonable loan servicing practices are met and communicated properly? How might your firm ensure loan borrowers experience a pain free transition between servicers and be assured of quality servicing throughout the life of the loan?4) Provide a high-level description of the firms current and past client base for similar services to include:a. Number of customersb. Potential for conflicts of interest in consumer basec. Past projects of similar type and scope and, where applicable, the contract name, the contracting agency, the total contract value, the period of performance, and a description of how the project relates to the work described in this Sources Sought.5) Cost/Fee Estimates6) Expected number and type of Key Personnel required to perform the requirements of this solicitation and the types of qualifications required for each Key Personnel identified. (i.e. Senior Personnel, Loan Manager(s), loan servicer(s), ect.)For Cost/Fee and Key Personnel estimates assume the following servicing requirements: (Loans will be performing and non-preforming, assume a 15% non-performance rate)Yearly Min Yearly Max# of loans Portfolio ($) # of loans Portfolio ($)Loans > $250,000 0 0 500 200 MillionLoans $250,000 20 4 Million 200 20 Million7) On a single sheet of paper answer the following:a. Based on the information provided, would your firm bid on an RFP for all listed services? Are their any areas of concern you have identified?b. Is your firm any of the following: (List all that apply)i. Small Businessii. Small Disadvantaged Businessiii. HUBZone (see FAR 19.305)iv. 8(a)v. Woman-Ownedvi. Veteran-Ownedvii. Service-Disabled Veteran Ownedviii. Large/Non-Profit Businessc. General Services Administration (GSA) Supply Schedule Number.d. DUNS Number.e. Point(s) of contact for your firm, including e-mail address and phone number.The Government will review the Capability Statement to determine if the interested firm can satisfy the requirements listed in part 1 through 4 of this Sources Sought Notice.A small business firm may submit a capability statement that includes the expertise of large business partner companies under a teaming arrangement. If a teaming arrangement is contemplated, then the response to this source sought must clearly discuss the areas that the small business firm intends to perform and the specific areas that the large business teaming partner intends to perform. Please note that at least 50% of the total cost of all services provided must be incurred by or for personnel of the small business firm pursuant to the FAR clause at 52.219-14 entitled "Limitations on Subcontracting (JAN 2017)".SBA reserves the right to use any and all information submitted by, or obtained from, an interested firm in any manner SBA determines is appropriate, including, but not limited to, the creation of a competitive solicitation. An interested party should avoid including any classified, business confidential, and/or proprietary information in its response. However, if an interested firm must submit such information, the information must be clearly marked, and the interested firm must provide sufficient justification as to why such information is business confidential and/or proprietary. SBA will review the information and safeguard it appropriately. The Government will not pay for any information that is provided in response to this Sources Sought/RFI nor will it compensate any respondents for the development of such information.SBA personnel may contact firms responding to this announcement to clarify a responder's capabilities and other matters as part of this market research process.The submission must be received no later than 8:00 a.m. ET on July 26, 2019. Any responses to this announcement shall be emailed only to the following contracting representatives:NOTE: THIS IS A SOURCES SOUGHT NOTICE / REQUEST FOR INFORMATION. THIS IS NOT A REQUEST FOR PROPOSALS.