Example 3. An insured depository institution offers small business loans that are guaranteed by the Small Busi- ness Administration (SBA). A small business obtains a $75,000 loan, docu- mented in writing, from the institution under the institution’s SBA loan pro- gram. The loan documentation does not indicate that the borrower intends or is authorized to re-lend the funds. Although the rate charged on the loan is well below that charged by the insti- tution on commercial loans, the rate is within the range of rates that the in- stitution would charge a similarly situ- ated small business for a similar loan under the SBA loan program. Accord- ingly, the loan is not made at substan- tially below market rates and is ex- empt from coverage under paragraph (c)(2) of this section.
Appears in 3 contracts
Sources: Covered Agreement, Loan Agreement, Covered Agreement