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504 CSA Servicing Updates in Electronic Lending - Servicing

(ETRAN)

March 2018

U.S. Small Business AdministrationOffice of Capital Access

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Overview – CSA Migration to CAFS

SBA and the 504 Central Servicing Agent (CSA) have engaged in an effort to migrate CSA systems to the Capital Access Financial System (CAFS) within SBA’s technology environment. The decision to migrate CSA systems was made in order to (1) provide SBA greater control of information technology requirements across loan program systems and (2) to continue SBA’s long-term goal of consolidating previously outsourced loan program systems within their technology environment.

Short-Term Impact

• Fewer points of entry for key data points CSA reviews at Funding (Disbursement) will allow for improved data quality

• Increased data security as all CSA data is now housed within CAFS

Long-Term Impact

• Modernized processes will begin to take shape across the loan lifecycle with the centralized data store solution

• Time saved as email communication for servicing actions with CSA is phased out3Public

Overview – CSA Servicing Actions in ETRAN

Effective 2/26, CDCs must begin using CAFS to kick off servicing actions with the CSA. CDC users need access to ETRAN within CAFS in order to update funding loans and to request certain servicing actions with the CSA.

What servicing actions will move to ETRAN?

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Funding Alerts during funding disbursement process

Borrower name, operating company name, and statement name updates

Borrower and operating company address updates

Third party lender bank wire information updates

Borrower ACH information updates

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Loan Cancellation – Prior to Disbursement

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Loan Cancellation

CDCs now have the authority to cancel 504 loans prior to disbursement within ETRAN. In order to cancel a loan in ETRAN:

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On top bar of loan page, select “Cancel” 1

Select “Yes” following the “Cancel SBA Loan Guaranty” prompt 2

Confirm status is “Fully Cancelled”3

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Loan Cancellation

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Loan Cancellation

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Loan Cancellation

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Funding (Disbursement) - Updates

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Funding (Disbursement) Actions

There will be three types of Funding Alerts that require action by CDCs:

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Paper form only correction1

ETRAN only correction2

Paper form and ETRAN correction3

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Funding (Disbursement) – Paper Form Corrections

Examples

• The Debenture lists an incorrect First Payment Date.

• ACH Form does not have the “Periodically as such amounts become due, without further authorization (standing authorization)” box checked.

• The Note date is missing on page 3 of the SAA.

• Typos on documents including Maturity Dates, Funding Dates, and SBA Guarantee Fee.

• Signature Date is missing on page 6 of SAA.

Corrective Action

• No updates will be made to ETRAN.

• Paper form updates are made by CDC and emailed or mailed overnight to CSA.• Mailed updates would include signature pages of the SAA/Debenture or Third Party Lender Fee

checks.

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Funding (Disbursement) – ETRAN Corrections

Examples

• CSA advises via Funding Alert email that the Operating Company listed on ETRAN does not match the SAA that was received. Upon review, CDC determines that the SAA is correct and there is an error on ETRAN. CDC must update the Operating Company name on ETRAN and reply back to CSA’s email that they have updated the Operating Company name on ETRAN. CSA would review and accept the changes.

• CSA finds a discrepancy in the Third Party Lender wiring instructions or ACH information on ETRAN versus the documents received. Upon the CDC’s review, they find that the documents are correct and make the necessary updates on ETRAN. CDC must advise CSA of which fields they have updated on ETRAN. CSA would review and accept the changes.

Corrective Action

• CDC makes update on ETRAN and updates CSA via email.

• Without email notification, CSA has no way of telling if updates have been made to ETRAN. 13Public

Funding (Disbursement) – Paper Form & ETRAN Corrections

Examples

• CSA sends a Funding Alert stating that the Borrower ACH or Third Party Lender ABA/Routing number provided is invalid. CDC would then update the Borrower ACH or Third Party Lender ABA/Routing number field on ETRAN and reply to the email advising the update has been made and attach corrected SAA wiring instructions page.

Corrective Action

• CDC makes update on ETRAN and must notify the CSA via email. If a hard copy document is required, the CDC must send the document via overnight mail. Otherwise, the CDC must include the form in the notification email.

• Without email notification, CSA has no way of telling if updates have been made to ETRAN.

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Interim Lender Wire Information Updates

CDCs may update interim lender bank wire information prior to the Pricing Date.

In order to request these updates, CDCs must update the following ETRAN fields and email SBA504CSA@wellsfargo.com an updated page 4 of the SAA.

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Interim Lender Wire Information Updates

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Bank Wiring Info - The Wire Transfer Instructions on page 4 of the SAA must match the Wire Transfer info under the Third Party Lenders section above.

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Interim Lender Wire Information Updates

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Bank Wiring Info - The Wire Transfer Instructions on page 4 of the SAA must match the Wire Transfer info under the Third Party Lenders section above.

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Servicing – Updates

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Profile Information Updates

CDCs may update the Statement Name or change the Borrower and Operating Company information prior to the Pricing Date and as a servicing action post-Funding (disbursement).

In order to request these updates prior to Funding (disbursement), CDCs must update the correct ETRAN field and email SBA504CSA@wellsfargo.com an updated page 1 of the SAA.

IMPORTANT NOTE: The W-9 TIN submitted to the CSA must relate to the Primary Borrower unless the W-9 is submitted as a Sole Proprietor.

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Name Updates – Statement Name

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Statement Name - The Loan Name within the Loan Info section of ETRAN must match the Statement Name on page 1 of the SAA.

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Add a New Borrower or Operating Company

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Borrower Names - This Primary Borrower must match the Borrower Name field on page 1 of the SAA. The Operating Company must only be listed on the SAA if there is an Operating Company designated on ETRAN. This field shown above should match the Operating Company Name on the SAA.

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Add a New Borrower or Operating Company

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Borrower Names - This Primary Borrower must match the Borrower Name field on page 1 of the SAA. The Operating Company must only be listed on the SAA if there is an Operating Company designated on ETRAN. This field shown above should match the Operating Company Name on the SAA.

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EPC/OC Updates

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If a loan is structured as an EPC, CDCs must select “Yes” to the question

“Loan Structured with Eligible Passive Company?” on the Loan Info tab on

ETRAN.

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CDC must update each borrower/guarantor as an EPC, OC, or None on the

screen.

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The most common validation error during the March 2018

funding cycle related to EPC/OC structure. If a loan is

structured with an EPC, there must be a corresponding OC;

otherwise, the CDC will receive a validation error at the top

of the submission page.

CDCs are now able to update Eligible Passive Company (EPC)/Operating Company (OC) information on the Loan Info tab of ETRAN.

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EPC/OC Updates

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EPC/OC - Loans structured with an Eligible Passive Company must also have a corresponding Operating Company. Structure must be detailed on the Loan Info tab of the loan record on ETRAN. Public

Address Information Updates

CDCs may update address information prior to the Pricing Date and as a servicing action post-Funding (disbursement).

If the update occurs prior to the Pricing Date, CDCs must update the correct ETRAN field and email SBA504CSA@wellsfargo.com an updated page 1 of the SAA. If the update occurs as a servicing action, CDCs must simply email SBA504CSA@wellsfargo.com a notice of the update.

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Updated Address Change Process

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CDCs must make updates to the Borrower, Operating Company, and W-9

addresses on ETRAN.

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CDCs must include an updated page 1 of the SAA and updated W-9 in an

email notification to SBA504CSA@wellsfargo.com.

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The most common address-related issue is multiple addresses being listed.

Because mail, such as 1098 forms and Residual Due to Borrower checks

(funding), is systematically sent to the address entered in CSA’s system, the

CSA receives return mail when multiple addresses are listed.

Accepted: 123 Spruce Street, Units 1-3

Rejected: 101, 103, & 205 Spruce Street

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Address Updates – Borrower

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Borrower Address - The Borrower Mailing Address on the SAA must match the mailing address shown above that is found under the Primary Borrower section on the left panel of ETRAN. Public

Address Updates – Operating Company

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Operating Company Address - The Operating Company Mailing Address on the SAA must match the mailing address under the Operating Company section on the left panel of ETRAN. Public

Borrower ACH Information Updates

CDCs may update Borrower ACH information prior to the Pricing Date and as a servicing action post-Funding (disbursement).

Regardless of whether the update occurs prior to Funding (disbursement) or as a servicing action, CDCs must update the correct ETRAN fields and email SBA504CSA@wellsfargo.com an updated Authorization Agreement for Pre-Authorized Payment (Debit) form.

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Updated Borrower ACH Change Process

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On the left panel of ETRAN, the user will click on the Borrower name listed under

“Borrowers”.1

User will make updates to the following fields in the box next to “Disbursement ACH”:

Bank Name, Account Name, Routing Number, Account Number, Account Type.2

After clicking “Save” at the bottom of the page, the user will see a message in the

Disbursement ACH field stating “Bank information is in the pending status”.3

Regardless of whether the update occurs prior to Funding (disbursement) or as a

servicing action, CDC must send an email to the CSA requesting an ACH change, which

month the change should be effective, and attach the “Authorization Agreement for Pre-

Authorized Payment (Debit)” form and a voided check (optional). This email is the same

as the current process.

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CSA will review the email request and work with the CDC if information is incomplete or

incorrect. CSA will reply to the email request advising whether it has been

approved/declined.

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If declined, the CDC must resubmit the request within ETRAN and/or update the email

attachment.6

* There will be no changes to the cut-off deadline of the 15th business day of the month.Public

Borrower ACH Information Updates

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ACH Information - The ACH Bank information submitted on the ACH form and voided check (optional) must match the Bank Information under the Primary Borrower section on the left panel. Public

General Information

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Validation Errors

SBA’s ETRAN system will provide validation errors to users who have inputted incorrect or incomplete information. This error is not a technology problem – instead, the errors are meant to provide the user with information about the incorrect or incomplete input.

Validation errors will detail the field(s) that need to be updated before the information on the screen is saved. CDCs must address the fields that are causing the validation error before information will be saved and updated for the CSA to process.

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General Information – Contacting CSA

General Mailing Address:

PricewaterhouseCoopers Public

Sector LLP

c/o Wells Fargo Bank, N.A.

Corporate Trust Services

9062 Old Annapolis Road

Columbia, MD 21045-1951

Attn: 504 Central Servicing Agent

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Toll Free Number:

1 (855) 572-1637

504 Email Address (Participant Questions):

sba504csa@wellsfargo.com

CLS Email Address (Website Questions):

cls@sba.gov

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General Information – W-9 Update

The IRS has revised the Request for Taxpayer Identification Number and Certification (IRS Form W-9) in November 2017. CDCs and SBA District Counsels can immediately begin using the revised Form W-9 as part of the Debenture closing documents. The CSA will no longer accept older versions of Form W-9 after the May 24, 2018 CSA Cut-Off Date.

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Questions?

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Appendix – Most Common Funding Alert Issues

Debenture & Note Terms on SAA page 3

• Debenture Date is always the Funding Date

• Note Date should match the date listed on page 1 of the Note (signed date of SAA should also match this date or fall after)

Address discrepancies on SAA page 1 and W-9 Form

• Multiple addresses provided for Borrower or Operating Company or discrepancies in addresses that should match

Ongoing SBA Guarantee Fee incorrect on page 5 of SAA

• SBA Fee should be based off of the SBA Approval Date

Tax Identification Number discrepancies on W-9 Form

• Social Security Numbers acceptable for Individuals, Single-Member LLCs, and Trusts

• Employer Identification Number required for all other tax classifications

First Payment Date and Semi-Annual Dates on Debenture page 1

• First Payment Date is the first day of the month 6 months after the funding date

• Semi-Annual Dates are calendar funding month and 6 months from funding month

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