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B-192884 1 (1979-07-31)

handle is hein.gao/gaobadhlp0001 and id is 1 raw text is: ,Ok1LF R G,. s V I DECISION FILE: B-1928 MATTER OF DIGEST: THE COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON. D.C. 20548 34 DATE: July 31, 1979 Chase Manhattan Bank -LSmall Business 4 o Administration Guaranteed LoanJ 1. SBA has discretion in appropriate case, subject to applicable statutory or regulatory provisions, to approve refinancing of existing non-guaranteed loan by new SBA guaranteed loan. Therefore, Bank's failure to pay guar- antee fee prior to default on initial loan, there- by extinguishing guarantee on that loan pursuant -to our decision B-181432, March 13, 1975, may not necessarily defeat otherwise valid guarantee of subsequent refinancing loan. 2. Where due to alleged clerical inadvertence date of note and date of disbursement of loan differ, it is not necessary to decide which date is controlling for purposes of determining whether guarantee fee was paid prior to default, because even assuming that default occurred prior to payment of guarantee fee, subsequent full pay- ment by Borrower would have brought loan into fully paid, current status, thereby curing any existing default and enabling SBA to purchase guaranteed portion of loan. The Chase Manhattan Bank, N. A. (Chase) has requested the General Accounting Office (GAO) to authorize the Small Business Administration (SBA) to purchase the guaranteed portion of a $250, 000 term loan made by Chase to the/Digital Lighting Corporatio(Digital). SBA previously declined to purchase the guaranteed portion of the loan because Chase had not paid the required guarantee fee prior to default by Digital. A bank is not entitled, as a matter of law, to a formal decision from our Office. See 31 U.S. C. 55 74, 82d (1976); and B-181432, November 12, 1975. However, since SBA's refusal to purchase the guaranteed portion of the loan was based on our decision B-181432, March 13, 1975, in which we held that SBA could not purchase the guaranteed portion of a loan if the guarantee fee had not been paid prior to the Borrower's default, we will consider the arguments presented by Chase. In accordance with our usual policy, we requested, and have received the views of the Administrator of SBA on this matter. SBA now takes the position that the Government should honor its guarantee on the $250, 000 term loan. :

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