[Federal Register Volume 71, Number 83 (Monday, May 1, 2006)]
[Notices]
[Pages 25624-25628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6506]


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SMALL BUSINESS ADMINISTRATION


SBA Lender Risk Rating System Notice and Request for Comments

SUMMARY: SBA is proposing for comment a lender risk rating system. The 
lender risk rating system is an internal tool to assist SBA in 
assessing the risk of each active 7(a) Lender and Certified Development 
Company's (``SBA Lender'') SBA loan operations, and loan portfolio, on 
a uniform basis and for identifying those institutions whose SBA loan 
operations and portfolio require additional SBA monitoring or other 
action. It is also a vehicle for assessing the aggregate strength of 
SBA's 7(a) and 504 portfolios. Under the lender risk rating system, SBA 
would assign each Lender a composite rating based on certain portfolio 
performance factors, which may be overridden in some cases due to 
Lender specific factors that may be indicative of a higher or lower 
level of risk. SBA Lenders would have access to their own ratings 
through SBA's Lender Portal.

DATES: SBA must receive comments on or before June 15, 2006.

ADDRESSES: You may submit comments by any of the following methods (1) 
E-mail [email protected]; (2) Fax: (202) 205-6831; (3) Mail: 
John M. White, Deputy Associate Administrator, Office of Lender 
Oversight, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416; (4) Hand Delivery/Courier: 409 Third Street, SW., 
Washington, DC 20416, c/o John M. White.

FOR FURTHER INFORMATION CONTACT: John M. White, Deputy Associate 
Administrator, Office of Lender Oversight, U.S. Small Business 
Administration, 409 Third Street, SW., Washington, DC 20416, (202) 205-
3049.

SUPPLEMENTARY INFORMATION:

Background

    SBA is developing an internal risk rating system for assessing an 
SBA Lender's 7(a) or 504 loan portfolio (i.e., loan portfolio 
performance). The risk rating system will be an internal tool that will 
assist SBA in assessing the risk of a Lender's 7(a) and 504 loan 
performance on a uniform basis and identify those Lenders whose 
portfolio performance demonstrates the need for additional SBA 
monitoring or other action. It is not intended to be a Lender grading 
system. The lender risk rating system will also serve as a vehicle to 
measure the aggregate strength of SBA's overall 7(a) and 504 loan 
portfolios and to assist SBA in managing the related risk. SBA will use 
Lender risk ratings to make more effective use of its on-site and off-
site lender review and assessments resources. The proposed risk rating 
methodology is set forth below. SBA is soliciting comments on the risk 
rating methodology. During the comment period, SBA will provide Lenders 
access to their own preliminary risk ratings through SBA's Lender 
Portal. A more detailed discussion of the risk rating proposal and 
portal access follows.

Risk Rating Proposal

Overview

    Under SBA's proposed risk rating system, SBA would assign all 
Lenders a composite rating. The composite rating would reflect SBA's 
assessment of the potential risk to the government of that Lender's SBA 
portfolio performance.
    For 7(a) Lenders, SBA would base the composite rating on four 
common components or factors. The common factors for 7(a) Lenders would 
be as follows: (i) 12 month actual purchase rate; (ii) problem loan 
rate; (iii) three month change in the small business predictive score 
(SBPS), which is a small business credit score on loans in the 7(a) 
Lender's portfolio; and (iv) projected purchase rate derived from the 
SBPS.
    For CDCs, SBA would base the composite rating on three common 
components or factors. The common factors for CDCs would be as follows: 
(i) 12 month actual purchase rate; (ii) problem loan rate; and (iii) 
average SBPS on loans in the 504 Lender's portfolio. The third factor 
replaces the third and fourth factors used for 7(a) Lenders because it 
was found, during the testing process, to be more predictive of SBA 
purchases for 504 Lenders.
    In general, these factors reflect both historical lender 
performance and projected future performance. The factors are derived 
through formulas developed using regression analysis validated and 
tested by industry experts. SBA would perform quarterly calculations on 
the common factors for each Lender, so that Lenders' composite risk 
ratings would be updated on a quarterly basis. Each of the factors is 
described in more detail in the Rating Components section below.
    The composite risk rating is a measure of how each Lender's loan 
performance compares to the loan performance of its peers. Thus, an 
individual Lender's overall loan performance (using all common factors) 
would be compared to its peers to derive that Lender's composite risk 
rating. Lenders whose overall portfolio performance (using all of the 
common factors) is worse than their peers will receive a worse, or 
higher score, while Lenders whose overall portfolio performance is 
better than their peers will receive a better, or lower, score.
    SBA recognizes that it may be inequitable to compare all Lenders in 
a risk rating system, without separating them into peer groups, because 
changes in loan performance would have dramatically different impacts 
on the portfolio performance of Lenders of different sizes. For 
example, the purchase of one loan from a Lender would have a much 
higher impact on the actual purchase rate component of a Lender with a 
small portfolio than it would on the actual purchase rate of a Lender 
with a large portfolio. Therefore, SBA has established peer groups to 
minimize the differences that could result from changes in loan 
performance for portfolios of different sizes. The peer groups are as 
follows (based on outstanding SBA guaranteed dollars):

[[Page 25625]]



------------------------------------------------------------------------
      7(a) Lender Peer Groups                  CDC Peer Groups
------------------------------------------------------------------------
$100,000,000 or more...............  $100,000,000 or more.
$10,000,000-$99,999,999............  $30,000,000-$99,999,999.
$4,000,000-$9,999,999..............  $10,000,000-$29,999,999.
$1,000,000-$3,999,999..............  $5,000,000-$9,999,999.
$0-$999,999 (lenders disbursed at    Less than $5,000,000.
 least one loan in past 12 months).
$0-$999,999 (lenders did not
 disburse at least one loan in past
 12 months).
------------------------------------------------------------------------

    As noted above, the common components would be used to derive a 
composite risk rating for each 7(a) and 504 Lender. Under the proposal, 
no single component factor would normally decide the Lender's composite 
rating. However, depending upon the size of the peer group, and the 
variation between a Lender's performance and that of its peers, a 
single factor could carry a disproportionate weight among the three or 
four components.

Composite Rating

    SBA would assign a composite rating of 1 to 5 to each Lender based 
upon their portfolio performance. A rating of 1 would indicate strong 
portfolio performance, least risk, and the least degree of SBA 
management oversight is needed (relative to other Lenders in their peer 
group), while a 5 rating would indicate weak portfolio performance, 
highest risk, and therefore, the highest degree of SBA management 
oversight. SBA proposes the following definitions for the composite 
ratings.
    Composite 1--The SBA operations of a Lender rated 1 would be 
considered strong in every respect, and would likely score much better 
than SBA averages in all or nearly all of the rating components 
described in this notice. A Lender rated 1 would have relatively stable 
component factors and overall composite rating from one quarter to the 
next. Since the component factors measure previous performance, and 
also attempt to predict future performance, a Lender rated 1 would be 
more likely to have well below average historical purchase rates, as 
well as well below average current problem loan rates that would 
predict lower than average future purchase rates. Overall, loans in the 
portfolio of a Lender rated 1 would demonstrate highly acceptable 
credit quality and/or credit trends as measured by credit scores and 
portfolio performance. A Lender rated 1 would typically also have a 
well managed SBA loan program as demonstrated through on-site or off-
site reviews and assessments (of mid-size and larger Lenders). Based on 
the strengths outlined in this composite rating, Lenders rated a 1 
would present SBA with the least amount of risk, and would thus be 
subject to the lowest level of SBA oversight compared to other Lenders 
in the same peer group.
    Composite 2--The SBA operations of a Lender rated 2 would be 
considered good, and would likely be above average in all or nearly all 
of the rating components described in this notice. A Lender rated a 2 
would have component factors and a composite rating that would 
typically be relatively stable from one quarter to the next. A Lender 
rated 2 would be more likely to have below average previous 
(historical) purchase rates, as well as below average current problem 
loan rates that would predict lower than average future purchase rates. 
Generally, loans in the portfolio of a Lender rated 2 would demonstrate 
better-than-acceptable credit quality and/or credit trends as measured 
by credit scores and portfolio performance. A Lender rated 2 would 
likely have a generally well managed (i.e., a few minor exceptions or 
findings) SBA loan program as demonstrated through on-site or off-site 
reviews and assessments (of mid-size and large Lenders). Based on the 
strengths outlined in this composite rating. Lenders rated a 2 would 
present SBA with a lower level of risk, and would thus be subject to a 
lower level of SBA oversight compared to other Lenders in the same peer 
groups.
    Composite 3--The SBA operations of a Lender rated 3 would be 
considered about average in all or nearly all of the rating components 
described in this notice. A Lender rated a 3 would have, on average, 
component factors and an overall composite rating that would generally 
be relatively stable from one quarter to the next. A Lender rated 3 
would likely have average previous (historical) purchase rates (as 
compared to their peers), as well as average current problem loans 
rates that would predict future purchase rates in line with SBA 
portfolio averages. Generally, loans in the portfolio of a Lender rated 
3 would demonstrate acceptable credit quality and/or credit trends as 
measured by credit scores and portfolio performance. A Lender rated 3 
would have an adequate (i.e., some minor exceptions or findings, but 
few if any major exceptions or findings, which can be corrected in the 
normal course of business) SBA loan program as demonstrated through on-
site or off-site reviews and assessments (of mid-size and large 
Lenders). However, Lenders rated a 3 would have room for improvement, 
should monitor their portfolio closely, and consider methods to improve 
loan performance. Based on the strengths and weaknesses outlined in 
this composite rating, Lenders rated a 3 would present SBA with an 
acceptable level of risk, and would thus be subject to standard SBA 
oversight compared to other Lenders in the same peer group. Oversight 
may include requests for corrective action plans.
    Composite 4--The SBA operations of Lender rated 4 would be 
considered below average in all or nearly all of the rating components 
described in this notice. A Lender rated a 4 may have several changes 
in any of its components factor rates; the component factors and 
overall composite rating may demonstrate instability or negative 
performance from one quarter to the next. A Lender rated 4 would be 
likely have above average previous (historical) purchase rates (as 
compared to their peers), as well as above average current problem loan 
rates that would predict future purchase rates above SBA portfolio 
averages. Generally, loans in the portfolio of a Lender rated 4 would 
demonstrate somewhat less-than-acceptable credit quality and/or credit 
trends as measured by credit scores and portfolio performance. A lender 
rated 4 would likely have a poorly managed (i.e., both minor exceptions 
or findings, and major exceptions or findings) SBA loan program as 
demonstrated through on-site or off-site reviews and assessments (of 
mid-size and large Lenders). Based on the weaknesses outlined in this 
composite rating, Lenders rated a 4 would present SBA with a less-than-
acceptable level of risk, and would thus be subject to greater than 
normal SBA oversight compared to other Lenders in the same peer group. 
Oversight measures could include (but are not limited to) additional 
reviews or assessments, requests for corrective action plans, and/or 
removal from delegated loan programs, depending

[[Page 25626]]

upon the level of activity and peer group.
    Composite 5--The SBA operations of a Lender rated 5 would be 
considered well below average in all or nearly all of the rating 
components described in this notice. A Lender rated a 5 is most likely 
to have changes in any of its component factor rates, and have the 
greatest likelihood to have their component factors and overall 
composite rating demonstrate instability or negative performance from 
one quarter to the next. A Lender rated 5 would be probably have well 
above average previous (historical) purchase rates, as well as well 
above average current problem loan rates that would predict future 
purchase rates above SBA portfolio averages. Generally, loans in the 
portfolio of a Lender rated 5 would demonstrate less-than-acceptable 
credit quality and/or credit trends as measured by credit scores and 
portfolio performance. A Lender rated 5 would likely have a record of 
significant SBA program compliance issues as demonstrated through on-
site or off-site reviews and assessments (of mid-size and large 
Lenders). Based on the substantial weaknesses outlined in this 
composite rating, Lenders rated a 5 would present SBA with the highest 
level of risk, and would thus be subject to extensive SBA oversight 
compared to other Lenders in the same peer group. Oversight measures 
could include (but are not limited to) additional reviews or 
assessments, requests for corrective action plans, and and/or removal 
from delegated loan programs, depending upon the level of activity and 
peer group.
    The descriptions within each Composite rating are not meant as 
definitions of the ratings, but are given to provide, in general, the 
characteristics a Lender receiving a particular rating may exhibit. 
Consequently, a Lender assigned a particular composite rating may not 
exhibit every characteristic described for that rating, nor would SBA's 
action be limited to those stated in the descriptions.
    In some cases, SBA may have reason to believe that a Lender's 
calculated composite rating may not fully reflect the level of risk 
that individual Lender presents. In those cases, SBA may override the 
composite risk rating (either positively or negatively) and assign a 
different composite score. Should a decision be made to override the 
composite score, SBA will provide the Lender with an explanation of the 
reason(s) for the override. More information on overrides of composite 
ratings is provided in the overriding factors section of this notice.
    SBA's proposal to base composite ratings on a numeric scale is 
similar to rating systems used by bank regulators and other federal 
loan guarantors. For example, SBA's composite rating of 1 is similar to 
that of a bank regulator in that it is indicative of an institution 
with strong performance and requiring little management oversight. 
SBA's rating system is similar to those of other federal loan 
guarantors because it measures risk and portfolio performance of loan 
portfolios guaranteed by SBA, rather than measuring the quality of the 
entire institution.

Rating Components

    The 4 Common Components for 7(a) Lenders:
    SBA's proposed quantitative risk rating system for 7(a) Lenders 
features four common component factors. The four common rating 
components are defined below.
    (i) Past 12 Month Actual Purchase Rate--The Past 12 Month Actual 
Purchase Rate is an historical measure of SBA purchases from the Lender 
in the preceding 12 months. Thus, this component provides a measure of 
Lender performance and risk as indicated by actual SBA purchases. SBA 
calculates this ratio by dividing the sum of total gross dollars of the 
Lender's loans purchased during the past 12 months (numerator) by the 
sum of total gross outstanding dollars of their SBA loans outstanding 
at the end of the 12-month period, plus gross dollars purchased during 
the past 12 months (denominator).
    (ii) Problem Loan Rate--The Problem Loan Rate provides an 
indication of current Lender risk. This problem loan indicator helps 
measure Lender performance and risk by showing current delinquencies 
and liquidations, as well as predicting potential future purchases by 
SBA. SBA calculates the problem loan rate by dividing total gross 
outstanding dollars of a Lender's loans that are 90 days or more 
delinquent plus gross dollars in liquidation, excluding purchases of 
active loans, (numerator) by the total gross dollars outstanding 
(denominator).
    (iii) 3 Month Change in Small Business Predictive Scores (SBPS)--
The SBPS is a portfolio management (not origination) credit score based 
upon a borrower's business credit report and principal's consumer 
credit report. SBPS is a proprietary calculation provided by Dunn & 
Bradstreet, under contract with SBA, and is compatible with Fair, Isaac 
& Co.'s ``Liquid Credit'' origination score. This component signals 
increasing or declining purchase risk by measuring changes in borrower 
credit trends, and acts as a predictor of possible future loan 
delinquencies, liquidations, and SBA purchases. The 3 month change in 
SBPS is calculated by measuring the percentage change, on a dollar-
weighted average basis, of the SBPS on all outstanding SBA loans held 
by the lender, from the previous quarter to the current quarter.
    (iv) Projected Purchase Rate--The Projected Purchase Rate is a 
predictive measure of the probability of the amount of SBA guaranteed 
dollars in a Lender's portfolio that are likely to be purchased by SBA. 
This factor uses credit bureau data on a Lender's individual SBA loans 
to project the purchase rate of a Lender's SBA portfolio. It is a 12-
month projection of future performance based on the most current credit 
data on a borrower's payment history. For each of a Lender's SBA loans 
outstanding, SBA multiplies the amount of guaranteed loan dollars 
outstanding by the probability of its purchase (as determined by the 
SBPS of the individual loan) and totals the sum of each individual loan 
outstanding. This total (numerator) is then divided by the Lender's 
total SBA-guaranteed dollars outstanding (denominator).
    The 3 Common Components for CDCs:
    SBA's proposed quantitative risk rating system for 504 Lenders 
features three common component factors. The three common rating 
components are defined below.
    (i) Past 12 Month Actual Purchase Rate--The Past 12 Month Actual 
Purchase Rate is an historical measure of SBA purchases from the CDC in 
the preceding 12 months. Thus, this component provides a measure of CDC 
performance and risk as indicated by actual SBA purchases. SBA 
calculates this ratio by dividing the sum of total SBA gross dollars of 
the CDC's loans purchased during the past 12 months (numerator) by the 
sum of total SBA gross dollars of their SBA loans outstanding at the 
end of the 12-month period, plus total SBA gross dollars purchased 
during the past 12 months (denominator).
    (ii) Problem Loan Rate--The Problem Loan Rate provides an 
indication of current CDC risk. This problem loan indicator helps 
measure CDC performance and risk by showing current delinquencies and 
liquidations, as well as predicting potential future purchases by SBA. 
SBA calculates the problem loan rate by dividing the total SBA gross 
dollars of a CDC's loans that are 90 days or more delinquent plus total 
SBA gross dollars of a CDC's loans

[[Page 25627]]

in liquidation (numerator), by the total SBA gross dollars outstanding 
(denominator).
    (iii) Average Small Business Predictive Scores (SBPS)--The SBPS is 
a portfolio management (not origination) credit score based upon a 
borrower's business credit report and principal's consumer credit 
report. SBPS is a proprietary calculation provided by Dunn & 
Bradstreet, under contract with SBA, and is compatible with Fair, Isaac 
& Co.'s ``Liquid Credit'' origination score. This component provides an 
indication of the relative credit quality of the loans in a CDC's SBA 
portfolio. The score is calculated from the average SBPS score of the 
loans in a CDC's portfolio, weighted by each loan's guaranteed loan 
dollars outstanding.
    Each of the common components described above would reflect a 
different means of measuring a Lender's risk to SBA in terms of loan 
purchase data. Loan purchase metrics provide a core gauge of SBA 
lending success and program risk. SBA believes a risk rating system 
emphasizing purchase indicators would be a good measure of SBA lending 
risk because purchases are a strong indicator of the cost to SBA, and 
predictive of final charge offs and loan recoveries. In addition, loan 
purchases are resource intensive and an administrative expense to SBA 
that reduces SBA's ability to provide assistance to small businesses. 
Finally, SBA is a ``gap'' lender, and purchases are a prime indicator 
of the failure of the financing to assist in the growth and development 
of small businesses.

Overriding Factors

    In addition to the common components calculated through the use of 
loan performance factors, the proposed risk rating system allows for 
consideration of additional factors. The occurrence of these factors 
may lead SBA to conclude that an individual lender's composite rating 
is not fully reflective of its true risk. Therefore, the proposed risk 
rating system would provide for the consideration of overriding 
factors, which may only apply to a particular Lender or group of 
Lenders, and permit SBA to adjust a Lender's overall composite rating. 
The allowance of overriding factors in helping determine a Lender's 
risk rating would enable SBA to use key risk factors that are not 
necessarily applicable to all Lenders, but indicate a greater or lower 
level of risk from a particular Lender than that which the calculated 
score provides.
    One of the most important overriding factors would be a Lender's 
on-site risk-based reviews/assessments usually performed on SBA's 
relatively large Lenders, or that may (under extraordinary 
circumstances) be performed on other Lenders whose performance 
demonstrates a highly unusual deviation from their peer group. SBA 
conducts on-site reviews of large Lenders, performs safety and 
soundness reviews of SBA Supervised Lenders, and uses certain off-site 
evaluation measures for less active Lenders. Consequently, these 
assessments, as a factor, may only be available for a fraction of SBA's 
approximately 5200 Lenders. Examples of other overriding factors that 
may be considered are: Early loan default trends; purchase rate or 
projected purchase rate trends; abnormally high default, purchase or 
liquidation rates; denial of liability occurrences; lending 
concentrations; rapid growth of SBA lending; inadequate, incomplete, or 
untimely reporting to SBA or inaccurate submission of required fees to 
SBA; and enforcement actions of regulators or other authority. This 
list is not all inclusive; however, SBA does not expect any of the 
overriding factors to affect a significant number of composite scores.

Request for Comments

    SBA is undertaking a deliberative development of the Lender risk 
rating system. The proposed risk rating system utilizes predictive 
modeling and behavioral scoring systems developed by private sector 
industry leaders in credit risk analysis. SBA has and will continue to 
perform annual validation testing on the risk rating system, and will 
further refine the system as necessary to improve the predictability of 
its risk scoring. SBA is requesting comments from the public on all 
aspects of the proposed risk rating system.
    To facilitate written comments on the proposed risk rating system, 
SBA will provide Lenders access to their own preliminary risk ratings, 
as well as average peer and portfolio performance information. SBA will 
provide Lenders access to this information through the use of the 
Lender Portal developed for SBA's Loan and Lender Monitoring System (L/
LMS). Once the risk rating system is finalized, Lenders will have 
access to their final quarterly ratings through the portal. Additional 
guidance on portal access follows.

Lender Portal

Overview

    SBA intends to communicate Lender performance to Lenders through 
the use of SBA's Lender Portal. The portal will allow Lenders to view 
their own quarterly performance data, including their most current 
composite risk rating. Lenders can also access data on peer group and 
portfolio averages. Consequently, a Lender will be able to gauge its 
performance relative to its peer group and the portfolio norm. While 
Lenders can view their ratings, their performance indicators, and peer 
and portfolio averages, they will not be able to view the individual 
ratings and performance indicators of other Lenders. The quarterly 
performance data will be overwritten on a quarterly basis; therefore, 
SBA recommends that Lenders save their performance data for their own 
tracking and trend analysis purposes.

Portal Data

    SBA plans to update portal data quarterly approximately six to 
eight weeks after a calendar quarter ends. Lenders will only be able to 
access the most recent quarterly data. Lenders will not be able to 
access previous quarters' data following an update.

Correcting Portal Data

    Portal data includes both summary performance and credit quality 
data. Because summary performance data is largely derived from data 
that Lenders provide to SBA through 1502 and 172 Reports, Lenders bear 
much of the responsibility for ensuring data accuracy. If a Lender 
reviews its performance components and they do not comport with its own 
data records, the Lender should confirm the accuracy of the underlying 
data. If the Lender determines that the data is inaccurate, it should 
seek to amend any incorrect data through SBA's normal processing 
channels (for example--for loan performance data, Lender should contact 
SBA's fiscal and transfer agent).
    Credit quality data used to help establish certain component scores 
is derived from credit bureau reports of the borrower business and its 
principals/guarantors. To the extent that credit quality data relies on 
information that a Lender provides on the business, its principals, and 
guarantors contained in the loan application and as required to be 
updated by the Lender, the Lender must take responsibility for ensuring 
this information is correct, complete, and updated. SBA recognizes that 
underlying borrower credit data cannot be changed by SBA or a Lender. 
Therefore, any changes to data provided to credit bureaus must be 
reported directly to Dunn & Bradstreet or Trans Union, as appropriate, 
by the borrower. All corrections to portal data (both summary 
performance and credit quality data) will be reflected in the

[[Page 25628]]

quarterly update following the quarter in which the correction is 
entered.

Portal Access

    Lenders with at least one outstanding SBA loan will be able to 
apply for portal access. SBA will issue only one portal user account 
per Lender. Lenders must submit initial requests for a portal user 
account (or requests to switch or terminate a user) by regular or 
overnight mail to SBA at the following address: Office of Lender 
Oversight--Capital Access, Suite 8200; Mail Code 7011, ATTN: Lender 
Portal, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416.
    Lenders must take the following steps in requesting portal access:
    (1) Request must be made by a senior officer of the Lender (Senior 
VP or above).
    (2) Request must be sent via regular or overnight mail to the 
address provided above.
    (3) Request must be made using the Lender's stationery.
    (4) Request must include the user's business card.
    (4) The stationery and business card should include the Lender's 
name and address.
    (5) The request should include the following data:
    (a) SBA FIRS ID Number(s).
    (b) Account user's name.
    (c) Account user's title.
    (d) Account user's mailing address at the Lender.
    (e) Account user's telephone number at the Lender.
    (f) Account user's e-mail address at the Lender.
    (g) Requesting officer's name.
    (h) Requesting officer's title.
    (i) Requesting officer's mailing address at the Lender.
    (j) Requesting officer's telephone number at the Lender.
    (k) Requesting officer's e-mail address at the Lender.

Once SBA receives and approves the user request, the Agency will 
forward the approval to SBA's portal contractor for issuance of a user 
account name and password. The portal contractor will e-mail the user 
his or her user name and password within approximately two weeks of 
account approval. The user can then access its data by logging into the 
Lender portal Web page at https://pdp.dnb.com/pdpsba/pdplogin.asp. 

Lender Portal Responsibilities

    Lenders are responsible for complying with SBA's requirements in 
obtaining and maintaining the portal user accounts and passwords as set 
forth below and as published from time to time. Lenders are also 
responsible for timely informing SBA to terminate or switch an account 
if the person to whom it was issued no longer holds that responsibility 
for the Lender. Upon accessing the lender portal, Lenders must take 
full responsibility for protecting the confidentiality of the user 
password and lender risk rating information and for ensuring the 
security of the data.

Confidentiality Agreement

    By clicking on the Portal log-in button to access the SBA Lender 
Information Portal (``Portal''), Lender will agree to use the 
Confidential Information (defined in the Portal) contained in the 
Portal only for confidential use within its own immediate corporate 
organization, and to hold and maintain the Confidential Information in 
confidence in accordance with the terms of the Agreement. Lender will 
agree to restrict access to the Confidential Information to those of 
its officers and employees who have a legitimate need to know such 
information for the purpose of assisting the Lender in improving the 
Lender's 7(a) or 504 program operations in conjunction with SBA's 
Lender Oversight Program and SBA's portfolio management (each referred 
to as a ``permitted party''), and to those for whom SBA has approved 
access by prior written consent and for whom access is required by 
applicable law or legal process. If such law or process requires Lender 
to disclose the Confidential Information to any person other than a 
permitted party, Lender will agree to promptly notify SBA and SBA's 
Information Provider (defined below) in writing so that SBA and the 
Information Provider have, within their sole discretion, the 
opportunity to seek appropriate relief such as an injunction or 
protective order prior to Lender's disclosure. In addition, Lender will 
agree to ensure that each permitted party is aware of the requirements 
of the Agreement and to ensure that each such permitted party agrees to 
the terms and conditions. Lender will agree not to disclose, and will 
agree to protect from disclosure, Lender's password to enter the 
Portal. Further, any disclosure of Confidential Information other than 
as permitted by the Agreement may result in appropriate action as 
authorized by law. Lender also will agree to indemnify and hold 
harmless each of SBA and any provider of the Confidential Information 
from and against any and all claims, demands, suits, actions, and 
liabilities to any degree based upon or resulting from the unauthorized 
use or disclosure of the Confidential Information. ``Information 
Provider'' means Dun & Bradstreet. (Mail Provider Information notice to 
Dun & Bradstreet, Legal Department, 103 JFK Parkway, Short Hills, NJ 
07078.)
    No information contained in the Portal shall be relied upon for any 
purpose other than SBA's lender oversight and SBA's portfolio 
management purposes. In addition, Lender will acknowledge and agree 
that the Confidentiality Agreement is for the benefit not only of the 
SBA but also of any party providing the Confidential Information. Any 
such party shall have the right and standing to pursue all legal and 
equitable remedies against the Lender in the event of unauthorized use 
or disclosure.

Portal Inquiries

    For general inquiries, a Lender may submit its e-mail to 
[email protected]. If a Lender needs to speak to an individual on a 
non-technical matter, it may contact Paul Bishop at 202-205-7516. SBA 
advises a Lender to state upfront its Lender name, address, FIRS 
number, and user name to expedite processing of all inquiries.

    Dated: April 26, 2006.
Michael W. Hager,
Associate Deputy Administrator, Office of Capital Access.
 [FR Doc. E6-6506 Filed 4-28-06; 8:45 am]
BILLING CODE 8025-01-P