Primary Sources for Ongoing Borrower Monitoring

“Use of loan covenants, if appropriate, including frequency of borrower and guarantor financial reporting;” Credit risk ratings must be “reviewed as frequently as necessary.”

Where: section 723.4(g)(1). The same subsection also requires periodic loan review sufficient for portfolio risk management and credit-risk ratings reviewed as frequently as necessary for the credit union’s monitoring policies.

Use: This is the strongest direct credit-union authority. It places borrower reporting, loan covenants, periodic review, and risk monitoring inside required commercial-lending risk-management processes.

“Lenders are responsible for monitoring each 7(a) Loan in their portfolio” and must use an “alternative method to monitor the Borrower’s financial condition.”

Where: Chapter 3, section E, pages 32-33 of the Standard Operating Procedure. The surrounding text identifies periodic financial statements, borrower contact or site visits, and relevant financial data as monitoring tools.

Use: The Small Business Administration expressly treats post-closing monitoring of borrower financial and operational condition as a lender servicing responsibility and allows alternative monitoring methods.

“Loan servicing and monitoring involve ongoing maintenance of each loan until payoff.” This includes “monitoring the status of required periodic borrower financial statements and loan covenant testing.”

Where: Loan Servicing and Monitoring, handbook pages 36-37.

Use: This is a current national-bank supervisory source expressly defining monitoring as ongoing through payoff and linking it to borrower financial statements and covenant testing.

“Portfolio Management and Servicing Capability”; “Loan Servicing; Compliance Monitoring; and Portfolio Management Activities”; and “Policies and procedures for monitoring compliance of Bond and Secondary Loans.”

Where: Portfolio Management and Servicing Capability, page 3; Internal Controls, page 4. The Fund also publishes Pledged Loan Monitoring, Financial Condition Monitoring, and Tertiary Loan Monitoring reporting resources updated April 18, 2025.

Use: This is direct Community Development Financial Institutions Fund evidence that formal loan servicing, compliance monitoring, financial-condition monitoring, and portfolio management are expected program capabilities. Scope caveat: the cited requirements are specific to participants in the Bond Guarantee Program, not every certified Community Development Financial Institution.

“Risks should be monitored throughout the life of a loan based on periodic review of the financial position of the borrower”

Where: Underwriting Standards. The Risk Management Processes section separately discusses financial covenants, financial reporting, regular site visits, periodic review, and early detection of adverse changes.

Exact location: Section 2(b), Maintenance of Designated Account(s), and section 2(c).

“new account(s) will be considered Designated Accounts” and “Lender shall have full read-only access to all Designated Accounts while this Agreement is in effect.”

Particularly relevant to smaller-business lending: the agreement requires notice of newly opened business accounts, brings them into the defined monitored-account set, and provides read-only access while the agreement remains in effect.

Exact location: Section 5.10, Online Access to View Bank Accounts, page 10 of 66.

“each Borrower shall provide Lender with online read-only access to all of Borrowers’ bank accounts”

The full clause requires the access to be maintained throughout the agreement term until the obligations are paid in full.

Exact location: Section 4.1, Lock Boxes and Blocked Accounts, filing page 13.

“On the Closing Date (and at all times thereafter), each Loan Party shall provide Lender with online read-only access to such Loan Party’s Deposit Accounts”

The full sentence requires that access to be maintained throughout the agreement term until all obligations are paid in full.