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)). Once you select a DSP that fits your organization, check and sign your DSP agreement. From there, the agreement is sent to the SBA for final approval. This ensures that all parties – lenders, LSPs and SBA – are in line with the requirements and responsibilities. Through a DSP agreement, you have defined a system of roles and responsibilities to ensure that your program receives the services needed for growth. It is important to note that the SBA does not provide a DSP agreement form. One reason is that PSD agreements must be tailored to the needs of each participating lender. Therefore, the SBA expects lenders and DPDs to negotiate the terms of PSD agreements to meet these specific needs.
Although the SBA does not include a DSP agreement form, the SOP identifies the specific requirements that must be included in the DSP agreement. The sixth condition is that the DSP agreement be determined or disclosed: (i) that the lender and the DSP cannot share a premium on the secondary market; (ii) that PSDs do not support an unsecured portion of the loan; (iii) DSP`s membership in other financial institutions, lenders, brokers and other joint ventures; (iv) any previous or existing relationship between the DSP and the Lender (or a declaration of the absence of such a relationship); (v) the DSP agreement is subject to all laws, regulations and directives, including the requirements of the SBA loan program; and (vi) that the terms of the DSP agreement control the lenders` loan portfolio in the event of other competing contracts or agreements between LSP and Lender. (SOP 50 10 5 (K), subsection B, section X (D) (6) (a-f)). 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. 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. 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.