Selling government guaranteed loans
Lenders sell the guaranteed portions of their SBA 7(a), USDA, and FSA originations into an active secondary market. Since they retain the un-guaranteed portions on their books and continue to service the loans, this does not jeopardize borrower relationships. With premium dollar prices and attractive servicing fees, secondary market transactions can make guaranteed lending a viable profit center for your institution.

Selling SBA 7(a) Guaranteed Loans

Good delivery requirements for SBA loans

Loan must be properly closed and fully disbursed prior to settlement date. Your transaction package should include these documents, along with a copy of your wiring instructions.

Send packages to:
Hanover Securities
Attn: Matt Monaco
6410 Poplar Ave., Suite 500 Memphis, TN 38119

SBA Form 1086

Completed and executed by lender

Guidehouse LLP, the SBA’s fiscal transfer agent (FTA), only accepts electronic documents.

Our registered holder name for page 2 of the 1086 and the signature page is BCM High Income Fund, LP.

Copy of SBA Form 147

Promissory Note

Payment terms

If the interest rate adjusts on a quarterly basis, the note must state that the interest rate will be adjusted every calendar quarter (the “change period”). The “Prime Rate” is the prime rate in effect on the first business day of the month, as published in the Wall Street Journal.


The following must be printed on the original note, signed and dated by an authorized officer of the bank:

“The guaranteed portion of the outstanding principal balance of this note has been transferred to a Registered Holder for value.”


The following must be printed on the copy of the original note:

“We certify this document to be a true and correct copy of the Original Note.”

This certification must also be signed and dated, preferably in blue ink. An original signature is required; photocopies are not accepted.

Copy of SBA Form 529B

U.S. Small Business Administration Authorization

This is required if the term of the loan is longer than 25 years or the SBA Form 529B has been changed.

Documentation from the SBA approving any changes in the SBA Form 529B that affect repayment terms (the Note) must accompany this form.

What’s next


Upon receipt and verification of the document package, Banes Capital Group (BCG) will submit it to FTA.


FTA will review and approve the completed package and notify BCG of approval. Hanover Securities will contact the lender to arrange a settlement date.


BCG will contact the lender to verify the current balance and paid-to-date of the loan.


Funds will be settled by wire transfer on the date agreed upon by BCG and the lender.

Selling USDA Guaranteed Loans

Good delivery requirements for USDA loans

These instructions apply to USDA Government Loans sold through the assignment method (Single Note) Rural Development (RD). Loans must be properly closed and fully disbursed prior to settlement date in the secondary market.

Send packages to:
Hanover Securities
Attn: Matt Monaco
6410 Poplar Ave., Suite 500 Memphis, TN 38119

As of 11/01/14, the secondary market requires us to obtain written verification from the USDA that the loan carries a valid guarantee prior to settling the transaction. We will obtain the verification directly from the USDA after the lender has made delivery of the loan documents.

These documents must be included in all transaction packages:

FSA Form 2242, USDA Form RD 4279-6, and USDA Form RD 5001-6

Assignment of guarantee forms can be obtained at your Farm Agency office.

This form must be the original typed published document. Copies will not be accepted.

All signatures on Page 3 must be original. Facsimile signatures are not accepted.

Whiteouts, mark-outs, and cross-throughs are not permitted except where necessary for compliance with year 2005 date requirements.

Type the loan identification number exactly as it appears on the loan guarantee.

On both USDA forms, the original signatures of the lender and holder must be attested by an authorized officer and the corporate seal affixed over the respective signature.

Assign the loan as follows:

TMICO c/o TMI Trust Company
115 S 84th St, Ste 325, Milwaukee, WI 53214
Attn: SBA Dept
Tax ID# 75-2707772

The Note 

As defined in the applicable agency regulations

This form must be a copy. Any modifications to the original note must accompany the note, and agency approval is required for any changes dated after the date of the note.

Form RD 449-34, FSA 2235, RBS 4279-5

Loan guarantee

The agency provides this form after the loan is guaranteed. The form must be a copy executed by the RD.

Prepayment pass-through letter

This is required if a prepayment penalty clause is incorporated in the loan agreement or note. The letter should state the lender’s intent to pass through to the holder a pro-rata share of any prepayment collected from the borrower. One original letter should be included for each transaction.

Transfer documents

If the seller is not the original lender, four transfer documents must be properly executed, assigning the loan from seller to purchaser. If the loan is already in the secondary market, include all transfer documents representing the chain of ownership from original holder to the current purchaser.
The transfer document must have no whiteouts, mark-outs, cross-throughs or other corrections. All signatures must be original.

Ready to sell into the secondary market? 

We’ll help you get competitive bids on your guaranteed government loan portions. Contact our Lender Relations Director to get started.

Secondary USDA Bid Sheet

Sample Standardized Secondary Market Bid Sheet

Jennifer Coltharp

Lender Relations


Email Jennifer