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B-212887 1 (1984-07-02)

handle is hein.gao/gaobadltw0001 and id is 1 raw text is: 4,5 jug OECIION FILE: B-212887 THE COMPTROLLEN GENERAL OP THE UNITO STATES WA HINGTON, 0. C. 2054U DATE: July 2, 1984 MATTER OF: SBA's Authority to Pay Interest on Funds Advanced by Bank at SBA's Request DIGEST: Small Business Administration (SBA) is autho- rized to pay interest on funds SBA requested the guaranteed lender to advance to purchase property at a foreclosure sale to preserve SBA's security interest in the property being sold. Government may pay interest on unpaid debts pursuant to a valid statutory or con- tractual provision committing it to do so. SBA's agreement to reimburse the lender for SBA's share of the principal amount advanced plus accrued interest, is within SBA's broad statutory authority under 15 U.S.C. § 633(c)(5)(A) to take any and all actions deemed necessary in liquidating or otherwise dealing with or realizing on loans made under the Act. This decision is in response to a request from Certify- ing Officer, John E. Lagos, Director, Office of Accounting Operations, Small Business Administration (SBA) for a legal opinion from our Office as to SBA's authority to pay Citi- zens Bank of Ogden, Utah, (Bank) the sum of $3,565.921/, representing the Bank's interest charges on moneys SBA requested the Bank to advance to purchase property at a foreclosure sale. As we explain below, SBA is authorized to pay the claim in question. BACKGROUND After a default by the borrower on his SBA-guaranteed loan, SBA purchased 90 percent of the guaranteed loan from the lender bank as it was legally obligated to do under the terms of the guarantee. As is customary, SBA then assumed the loan servicing responsibilities, placed the loan in I/ The total of $3,565.92 represents interest, accruing at the rate of $17.48 per day, on the principal amount of $56,649.60, between the date on which the Bank disbursed the moneys and the date on which the Bank received reim- bursement of the principal amount from SBA.

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