Have You Reported Your SBA Loans To The Credit Bureaus?

February 22, 2016

Or the better question should be, “Did you know that SBA requires loans processed through SBA to be reported to credit reporting agencies?”

 

While the requirement has been active for well over a decade, many financial institutions are unaware of the requirement. SBA guidelines state, “In accordance with the Debt Collection Improvement Act of 1996, Lenders are required to report information to the appropriate credit reporting agencies whenever they extend credit via an SBA loan. Thereafter they should continue to routinely report information concerning servicing, liquidation, and charge-off activities throughout the life-cycle of the loan.”

 

Here are some important answers to help you and your team:

 

Who is the Lender required to report?
The Lender must report borrowers of SBA-guaranteed loans to commercial credit reporting agencies. The Lender is not required to report on the guarantors of the SBA loans.

 

Where does the Lender report?
The Lender is to submit the report to a commercial credit bureau reporting agency. These agencies are abundant and your institution may have preferred reporting resources, but the top three VITAL suggests are:

 

  1. Dun and Bradstreet (D&B)

  2. Equifax Small Business Enterprise

  3. Experian SmartBusinessReports™

 

These agencies are all well respected within the industry and provide thorough, accurate, and timely documentation.

 

When does the Lender report?
Lenders are to report when an SBA loan is disbursed and quarterly thereafter. Reporting is required for the entire life-cycle of the loan through charge-off activities.

 

Have You Reported Your SBA Loans To The Credit Bureaus?

What information does the Lender report?
The Lender is to report the name, address and TIN of the borrower; the amount, status and history of the debt; as well as the agency or program under which the debt arose.

Reporting the transactional history of SBA loans to the consumer credit reporting agencies gives other creditors notice of debts owed by a small business. It allows other lending institutions and firms to know a consumer’s total existing debt. Additionally, SBA states “consumers who are credit conscious are more likely to pay on your accounts, if they know that you will report their payment history to credit agencies.” For more information on the requirements and benefits of reporting SBA loans, SBA has released the Participant Guide for Credit Reporting.

 

To contact our SBA Lending team for more information on Credit Bureau reporting or to help your team with the intricacies associated with SBA lending, call VITAL Financial Services at 515-225-4876.