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B-181432 1 (1979-05-21)

handle is hein.gao/gaobadhgf0001 and id is 1 raw text is: DECISION V: /d( ~~3O FILE: B-181432 ~g~f~iDIL2IQ DATE: MAY211979 MATTER OF: Community State Bank and Trust Company-LSmall Business Administration Guaranteed Loan In accordance with B-181432, March 13, 1975, and subsequent opinions upholding ThaF ecision, determination by Small Business Administration (SBA) to terminate its guarantee on loan made by bank was correct since SBA ias no authority under Loan Guaranty Agreement to accept payment of guarantee fee after default by borrower. Bankts arguments that it constructively complied with provisions of Loan Agreement or, in alternative, that SBA is estopped from enforcing those provisions are not legally or tactually supportable. This is in response to a request from the legal representatives of the Community State Bank and Trust Company (CSBT) concerning a&L&O $105,000 loan CSBT made to Leal Glass Company,-Lar-Teal-that ' was guaranteed by the Small-usiness Administration (SBA). SBA denied liability under-the guaranty because USBT had not paid the required guaranty fee prior to default by the borrower. We were requested to review the facts concerning this matter and consider whether CSBT should be exempted from the effect of our March 13, 1975, decision. CSBT is not entitled as a matter of law to a formal decision from our Office. See 31 U.S.C. §§ 74, 82d (1976), as well as B-181432, November 12, 1975. However, since SBA's refusal tQ purchase this loan was based on our decision of March 13, 1975, B-181432, in which we held.that SBA could not purchase the guaranteed portion of a loan if the guaranty fee had not been paid prior to the borrower's default, we will consider the arguments set forth in the letter from CSBT's legal representative. Based on the information contained in that letter as well as the information we have obtained from SBA concerning this loan, the facts concerning this matter appear to be as follows. On May 6, 1976, SBA authorized CSBT to make an $85,000 loan to Leal with a 90 percent guaranty by SBA. Subsequently, on June 8, 1976, SBA authorized an increase in the amount of the loan to $105,000. The full $105,000 amount was disbursed on July 13, 1976. Although the borrower de- faulted on this loan on November 13, 1976, when he failed to make the payment due on that date, the required guaranty fee totaling $945 (1 percent of the guaranteed portion of the loan) was not received by SBA until November 18, 1976. The loan settlement sheet was not received by SBA until November 29, 1976. - 1 - DIGEST: dj k C/J-~ 0%LER THE COMPTROLLER GENERAL * OF THE UNITED STATES WASHINGTON. D.C. 2054

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