Small Business Administration Fiscal Agent

An opinion was requested concerning the Small Business Administration's (SBA) authority to enter into a relationship with a "private entity" which would serve as the centralized agent in the secondary market for the SBA-guaranteed portions of loans to small business borrowers. The SBA does not have authority to guarantee unconditionally the purchaser of the guaranteed portion of an SBA-guaranteed loan against an error in the certification of the outstanding loan balance by a private entity acting as the SBA fiscal and transfer agent. However, the SBA can appoint a private entity to serve as its agent provided that it merely guarantees the holder against the fiscal agent's failure to properly forward loan repayments from the borrower.