The U.S. Small Business Administration has permanently revoked Folsom-based REsource Capital Inc.'s 504 loan program authority and moved to seize the lender's loan portfolio.
The action against the local real estate financing firm came down Monday. SBA cited REsource Capital's failure to establish or maintain a required loan loss reserve fund, failure to pay invoiced obligations in a timely manner and failure to maintain the ability to operate financially under federal requirements.
SBA's 504 loan program is a key component of financing small- and medium-size businesses by providing them with long-term capital to purchase or improve fixed assets or real estate.
The 504 program has long been regarded as a significant component of economic development in communities nationwide.
REsource Capital, established in 1978, has specialized in below market, fixed-rate financing for commercial and industrial projects via the SBA 504 loan program. The company's focus is in California and parts of Nevada and Oregon. It has a portfolio of more than 1,200 loans.
An extensive report accompanying the SBA action cited an August 2011 review of REsource Capital's finances, with an SBA auditor concluding that the lender's "liabilities exceed the fair and realizable value of its assets and (REsource Capital) is unable to pay its debts as they become due."
The auditor also concluded that REsource Captial's ability to repay obligations of nearly $24 million "is doubtful."
In December 2011, REsource Capital challenged the balance sheet in the auditor's report. However, the lender's response ultimately was not enough to override the SBA's conclusions.
Calls to REsource Capital were not immediately returned.
Read more Wednesday in The Sacramento Bee and at Sacbee.com.