13 CFR 115.17 - Minimization of Surety's Loss.

§ 115.17 Minimization of Surety's Loss.

(a)Indemnity agreements and collateral -

(1)Requirements. The Surety must take all reasonable action to minimize risk of Loss including, but not limited to, obtaining from each Principal a written indemnity agreement which covers actual Losses under the Contract and Imminent Breach payments under § 115.34(a) or § 115.69. The indemnity agreement must be secured by such collateral as the Surety or SBA finds appropriate. Indemnity agreements from other Persons, secured or unsecured, may also be required by the Surety or SBA.

(2)Prohibitions. No indemnity agreement may be obtained from the Surety, its agent or any other representative of the Surety. The Surety must not separately collateralize the portion of its bond which is not guaranteed by SBA.

(b)Salvage and recovery -

(1)General. The Surety must pursue all possible sources of salvage and recovery. Salvage and recovery includes all payments made in settlement of the Surety's claim, even though the Surety has incurred other losses as a result of that Principal which are not reimbursable by SBA.

(2)SBA's share. SBA is entitled to its guaranteed percentage of all salvage and recovery from a defaulted Principal, its guarantors and indemnitors, and any other party, received by the Surety in connection with the guaranteed bond or any other bond issued by the Surety on behalf of the Principal unless such recovery is unquestionably identifiable as related solely to the non-guaranteed bond. The Surety must reimburse or credit SBA (in the same proportion as SBA's share of Loss) within 45 days of receipt of any recovery by the Surety.

(3)Multiple Sureties. In any dispute between two or more Sureties concerning recovery under SBA guaranteed bonds, the dispute must first be brought to the attention of OSG for an attempt at mediation and settlement.

[ 61 FR 3271, Jan. 31, 1996, as amended at 79 FR 2087, Jan. 13, 2014]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

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United States Code
Statutes at Large
Public Laws

Title 13 published on 09-May-2018 03:49

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 13 CFR Part 115 after this date.

  • 2017-08-21; vol. 82 # 160 - Monday, August 21, 2017
    1. 82 FR 39491 - Miscellaneous Amendments to Business Loan Programs and Surety Bond Guarantee Program
      GPO FDSys XML | Text
      Final rule.
      This rule is effective September 20, 2017, except for the amendment to § 120.1400(a), which is effective October 20, 2017.
      13 CFR Parts 109, 115, and 120
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