The U.S. Small Business Administration`s (SBA) loan program offering lenders a wide range of benefits. From expanded portfolios to SBA guarantees and increased customer loyalty, lenders are rewarded for extending their credit line. If you have any further questions about PSDs and PSD agreements, please contact us. We`ll be happy to help and we`re just a phone call away. The DSP agreement is a written contract that governs the relationships of lenders and DSP and is required by the SBA. The SBA has developed a set of guidelines to protect all parties who enter into a contractual PSD agreement, but there is no universal PSD contract. Therefore, each DSP has its own agreement with models, and it is important that you fully understand it before signing. With so many benefits for lenders, it`s easy to see why many institutions opt for a partnership with a DSP. However, the SBA requires lenders to take full responsibility for the loans and their efficient and correct management. While lenders have reasonable discretion in determining compensation for the SPA, the SOP provides additional guidelines for fees paid to the PSD. The fourth condition is that the PSD agreement sets compensation for the DSP, but only for the services actually provided.
In addition, the PSD agreement must establish: (i) that royalties related to the packaging, processing or resumption of loans cannot be subject to the approval or closing of the loan; (ii) that all compensation costs must be paid by the lender; (iii) prohibit PSDs from using the same services for the SBA applicant; and (iv) the name of the SBA applicant is duly identified in connection with the billing of credit packages or other credit processing services. (SOP 50 10 5 (K), subsection B, Chapter 3, Section X (D) (4) (a-d)). The recently revised Standard Operating Procedure 50 10 5 (K” (“SOP”) defines the lender contract (DSP) as “a written contract between a lender and an agent assisting the lender in the awarding of 7 (a) loans and lending services.” With respect to credit assistance and service tasks, the DSP acts as an empowered representative of participating lenders in a small business administration (SBA) loan or loan portfolio. The SBA sees the DSP agreements as a way for lenders to hire independent contractors rather than directly recruit the same employees. However, despite such a contractual relationship between the lender and the DSP, the lender must demonstrate that it will continue to assume all day-to-day responsibilities for “assessment, processing, closing, maintenance, liquidation and beheading” of its SBA loan or loan portfolio. (SOP 50 10 5 (K), subsection B, Chapter 3, Section X (D)). The purpose of this article is to provide participating lenders and potential joint ventures with an abbreviated guide to the SBA`s expectations for PSD agreements. Balance looks like this. If you partner with a lender service provider (DSP), you can increase your SBA loan without incurring the fixed costs of recruiting additional staff. Offering SBA loan programs should not be a burden on your staff or your budget.