
Whether it’s facilitating communication among syndicated loan parties, processing a loan trade, tax reporting, or maintaining the loan's books and records, the administrative agent is a powerful resource for lenders and borrowers. Administrative agents are typically organized and detailed by nature, which means handling complexity is one of their core competencies.
Timely Communication Keeps All Parties Informed
The administrative agent acts as the central communication point for the parties to the credit agreement. The borrower is required to provide financial information and other compliance materials to the administrative or loan agent, which is then distributed to lenders by the administrative agent. The borrower may also send the loan agent other items it would like sent to the lenders, such as a request for a waiver or amendment to the credit agreement. These materials are best disseminated by the administrative agent to the lenders by using an online data platform. The administrative agent will also communicate with the borrower and lenders regarding routine matters such as debt service payments, interest rates, and borrowings.
Loan Agency Case Study: Raising the Bar in Lender Services
View Video TranscriptMy name is Beth Cesari. I'm a senior director, relationship manager. I've been at SRS Acquiom since 2022. And prior to that, I was in the banking industry for over 17 years.
We had a lender come to us because they were executing several deals every year, and they felt that they weren't getting the service level that they were looking for from their current service provider. So they said, let's give SRS Acquiom a try. And, we took it from there.
SRS Acquiom was able to provide them with a solution by providing insight into the transaction, problem solving, and giving them status updates over the course of the transaction. They felt that our team was providing the type of service level that they were really looking for.
Oftentimes, we're getting emails late at night from lawyers. They're looking for comments, they have questions. Can we support this? Can we look into something? And so we are 24/7 answering questions just to make sure that we're not the hold up on the deal and just get it done.
SRS Acquiom is definitely set apart from the competitors in terms of our responsiveness, our proactivity, our knowledge level, and really the team works really hard to get everything accomplished. We're incredibly flexible and we're willing to work with clients as needed.
Ultimately, the client was really happy with the service that the team provided. They were interested to bring us more deals. And ultimately what ended up happening is that they brought us seven more deals, and we have three currently in the pipeline.
I think at the end of the transaction, the client said something like "this transaction was incredibly seamless, and we're looking forward to doing more with SRS Acquiom in the future."
One of the main responsibilities of the administrative agent is to maintain the loan register. The register is a ledger that sets forth the name and loan commitment of each lender. The register also contains the principal, interest, and fees owed to each lender. The borrower and lenders may retain their own records, but the administrative agent is charged with maintaining the official register of the loan and can then address any questions from all parties.
Admin Agents Facilitate Accuracy in Loan Trade Processing
To settle a loan trade, the buyer and seller will enter into an assignment and assumption agreement that specifies many factors, including the loan and amount being traded. The executed assignment and assumption will then be submitted to the administrative agent for processing. It is necessary for the administrative agent to be involved in settling loan trades to ensure payments are accurate, and the register is updated with the correct information. Subject to obtaining any necessary consents, the administrative agent will acknowledge the assignment and assumption, update the register to reflect the trade, and return the acknowledged assignment and assumption to the parties thereby confirming that the register has been updated to reflect the assignment.
It is necessary for the administrative agent to be involved in settling loan trades to ensure payments are accurate, and the register is updated with the correct information.”
Use an Admin Agent for Tax Reporting
A great benefit of the administrative agent is their role in tax reporting. Due to their work making payments, they also act as a withholding agent under the Internal Revenue Code. As a withholding agent, the administrative agent is required to withhold any funds subject to withholding tax. The administrative agent also needs to report certain payments, including interest payments, to the borrower, lenders and the Internal Revenue Service. The administrative agent collects W-8 or W-9 tax forms from the borrower and each of the lenders to withhold taxes and perform tax reporting correctly.