Propriety of Purchasing Loan

A bank making a loan objected to the refusal of the Small Business Administration (SBA) to purchase the guaranteed portion of a loan because the bank had not paid the required guarantee fee prior to default by the borrower. It is the position of GAO that the language in the Guaranty Agreement specifically requires that SBA can not accept late payment of the guarantee fee when the underlying loan was already in default or the lender was aware of the possibility of imminent default. This provision in the Guaranty Agreement is a material and unambiguous condition precedent to SBA's guarantee. The approval or disapproval of a specific purchase request is a matter for decision by SBA as the administrative agency, and GAO will not review the matter unless SBA is uncertain how to proceed.