State Small Business Credit Initiative - Frequently Asked Questions (Faqs) - U.s. Department Of The Treasury Page 16
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37U.S. Department of the Treasury
State Small Business Credit Initiative
may be employed for allowable administrative expenses. Administrative charges to subsequent
transfers are not to exceed three (3) percent of the transferred amount.
To supplement these amounts, states, territories and municipalities may charge fees for program
administration. Proceeds from these fees, as well as any interest income or other program income, may
be used for allowable administrative expenses.
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Post-Award / Compliance Questions
1. Are there any recoupment provisions in the Allocation Agreement for the allocated funds?
Yes. Section 6.4 of the Allocation Agreement mandates that if the participating state, territory or
municipality is found in default of the Allocation Agreement, Treasury may recoup misused funds. Other
sections of the Allocation Agreement disclose other circumstances that will limit access by a state,
territory, or municipality' access to the allotted funds. Section 6.2 of the Allocation Agreement explains
the discretionary remedies available to Treasury if the state, territory or municipality is found in default
of the agreement. These remedies include the authority to withhold any future disbursements pending
resolution of the event of default and the authority to reduce or suspend future disbursements. Events
of default are listed in Section 6.1 of the Allocation Agreement and include making inaccurate, false or
misleading information in the application or Allocation Agreement and failure to comply with any part of
the Allocation Agreement, including failure to submit timely and accurate reports. Lastly, Section 7.1 of
the Allocation Agreement covers termination of availability of SSBCI funds.
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2. Under what circumstances may a financial institution lender use SSBCI funds to support a new
extension of credit for the purpose of satisfying a prior obligation to the same financial institution or
an affiliate? Updated November 27, 2013 to reflect SSBCI position on loan purchases.
Financial institution lenders are generally prohibited from refinancing an existing outstanding balance or
previously made loan, line of credit, extension of credit or other debt owed by a small business
borrower already on the books of the same financial institution (or an affiliate) into an SSBCI-supported
CAP or OCSP. However, a financial institution lender may use SSBCI funds to support a new extension of
credit that repays the amount due on a matured loan or line of credit when all the following conditions
are met:
the new loan or line of credit includes the advancement of new monies to a small business
borrower (excluding closing costs);
the new credit supported with SSBCI funding is based on a new underwriting of the small
business's ability to repay and a new approval by the lender/investor;
proceeds from the new credit may only be used to satisfy the outstanding balance of a loan
or line of credit that has already matured or otherwise termed and the prior debt was used
for an eligible business purpose, as defined by the SSBCI Policy Guidelines; and,
State Small Business Credit Initiative Application
Page 16 of 37
FAQs
April 21, 2016
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