How To Submit False Statements To The SBA


Third Party Lender Agreement

In the world of SBA 504 Lending a series of certifications or promises to the U.S. Government are required before a government guaranteed loan can be issued. Essentially, SBA Lenders need the permission of the SBA before they can make any changes to a loan. At all times the lenders are promising that they have verified any information submitted through them and that they are not submitting anything that could be considered misleading.

These certifications are strictly between the U.S .Government and the SBA Lenders entrusted to administer the program. None of the certifications or submissions are seen by the Borrower. The first promise looked at here is the Third Party Lender Agreement.  This certification is jointly signed by the Bank (BBVA Compass Bank) and the CDC (Southwestern Business Financing Corporation).

It is important to note that anything in excess of the Third Party Loan amount cannot be secured by a lien on the Common Collateral (commercial real estate).  Unless it is disclosed to the SBA and in a subordinate position.  In other words what we see in this transaction was outside of the SBA Authorization and misleading.

The “Amount of the Third Party Loan” as of April 25, 2007 was $1,400,000 as seen in the Modification to Promissory Note.  However, by November 27, 2007 both the bank and the CDC conceal this material fact from the SBA.   Instead, they jointly mislead the SBA by stating the loan was only $1,150,000.

On the same date of November 27, 2007 when the false statement was submitted to the SBA; BBVA Compass Bank admitted in its letter to Southwestern Business Financing Corporation that the

“Note is actually $1,400,000”  

actual note 1.4 letter

The letter appears to be another confirmation of the on-going secret “Side Deal” that BBVA Compass and Bob McGee were concealing from the woman-owned business and the SBA.

There are several promises made in the Third Party Lender Agreement.  Two in particular are written to deter lenders from attempting to manipulate the safety and soundness of the SBA 504 Loan Program.  The only check point that could intervene or correct false statements from being submitted would be the CDC.

  1. Amount of Third Party Loan is fully advanced and does not and will not exceed the amount allowed in the Authorization
  2. Accurate Information lender warrants and represents that all information provided is accurate and has not withheld any material information.

In this certification BBVA Compass Bank and McGee concealed the fact that the Third Party Loan/First Lien was increased to $1,400,000.  The amount allowed in the SBA Authorization was only $1,150,000 A difference of $250,000 would be considered “material” and a “false statement” to the SBA.  This excess amount of $250,000 by SBA rules can not be secured in the banks first lien. 

In the certifications false statements were submitted to the SBA to induce the funding of a government gauranteed loan.   The Side Deal to seize the $250,000 grant funds from the woman-owned business would in theory resolve the false statement.   However, in the event the side deal failed the lenders were prepared with a secret Cover Up plan to prevent any scrutiny into their false statements.  (Side Deal and Cover Up…coming soon)

*If you or someone you know has had an unfair experience or inexplicable experience with an SBA 504 Loan please contact us at: 

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