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B-181432 1 (1979-04-05)

handle is hein.gao/gaobadhby0001 and id is 1 raw text is: DIECISION THE COMPTTIOLLER GENE1AL OF THE UNITED STATES WA SH IN GTON .C 2O 4 FILE: B-181432 DATE: April 5, 1979 MATTER OF: Bank of El Paso - Small Business Administration Guaranteed Loan DIGEST: In accordance with B-181432, March 13, 1975, and sub- sequent opinions upholding that decisiqn,[determination by Small Business Administration -4SBAYto terminate its guaranty on loan made by Bank of El Paso was correct tince SBA has no authority to accept late payment o' guaranty fee from lender if loan is already in default, as defined in SBA's regulations, or lender has reason to believe default is imminent. Although SBA might in certain circumstances be authorized to reinstate its guaranty if defau-Lt was completely cured by borrower, 0l within reasonable period of time and fee was paid prior to occurrence of any new default, this case is not appropriate one for such action since curing was inadequat isis in response to a request from the Pres3ident of the ank of ElPaso that we advise the Small Business Administrtion (SBA) to reverse its decision to withdraw its 90 percent guarantee of a $200,000 loan to Aritex, Inc. because the Bank had not paid the required guarantee fee prior to default by the borrower. The.Bank of El Paso is not entitled, as a matter of law, to a formal decision from our Office. See 31 U.S.C. H§ 74, 82d (1976); and B-181432, November 12, 1975. However, since SBA's determination that a valid guarantee of this loan no longer existsand its refusal to purchase the guaranteed portion of the loan, was based on our decision B-181432, March 13, 1975, we will consider the arguments set forth in the Bank's letter. Based on the information provided by the Bank and the accompany- ing enclosures, including a letter from SBA datEd December 15, 1977, in which SBA advised the Bank that the loan was no longer guaranteed, the facts concerning this matter appear to be as follows. On January 4, 1977, the SBA office located in El Paso, Texas, approved a 90 percent guarantee of a $200,000 loan to be made by the Bank of El Paso tor IT The Bank disbursed the loan funds to the borrower on February 18, 1977, although the guarantee fee was not paid until June 10, 1977, at which time the borrower L1L7-O e. A urll!2 P (cf6991

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