Benefits of Using a Third-Party Agent or Loan Facilitator

Administrative and facility agents play an integral role in efficiently administering loan transactions. There are several considerations when hiring the right agent. This checklist will help you understand an agent’s functions so that you make the right choice to ensure a successful deal.

Why a third-party administrative or facility agent should be your first instinct:

  • Expertise in Administering Loans
    A third-party administrative or facility agent has an entire staff solely focused on the administrative functions of your deal.
  • Superior Systems and Controls – Loan Servicing and Tracking
    Specialized software streamlines the functions, saving time and ensuring efficiency.
  • Independent and Conflict-Free
    With no affiliation to a deal party, a third-party agent acts impartially.
  • Loan Administrator that is Guided by the Agreement
    A third-party agent fulfills the requirements of the loan agreement.
  • Collateral Tracking and Storage
    Third-party collateral or security agents track pledged security and securely store any physical collateral for the loan.

Administrative Expertise in Administering Loans

Third-party agents are experienced in all elements of loan administration. An agent solely focused on administrative functions can free up other deal parties so they can focus on other matters, such as the next transaction.

Experienced agents are versed in all types of transactions – from performing to distressed debt and from sub-investment grade to high grade. Third-party agents are experienced across all industries and won’t delay executing a transaction because of something specific to that particular deal. 

Superior Systems and Controls – Loan Servicing and Tracking

Specialized software allows agents to enforce accuracy, promptly distribute communications, and monitor activity within the loan system. Controls will ensure loans are tracked accurately and payments are made timely.

Independent and Conflict-Free Loan Agent

A third-party agent is typically conflict-free and unbiased in their approach to administering a loan. The client’s experience is a top priority, and the agent’s focus is administrating the loan already in place so that the lender may focus on its next origination.

Loan Administration that is Guided by the Agreement

Credit agreements are to be carried out as specified within the documents. There are some times when discretion is required, and an agent will need to follow the direction of the lenders. Overall, the function of the administrative or facility agent is to administer the loan agreement in a comprehensive and timely manner. 

Simplified Tax Reporting

Knowing which tax documents need to be reviewed and when withholding is required, is another job of the administrative or facility agent. 

The agent also files the applicable tax reporting for interest and fee payments made under the credit agreement.  There are a variety of tax forms that may be applicable - including 1099-INT, 1099-MISC and 1042 reporting. 

Failing to comply or file appropriately can cause unforeseen headaches for the Borrower and Lenders.  

Collateral Tracking and Storage

Tracking the pledged security and safeguarding any physical collateral pledged by the borrower is another critical role of the agent.   

Ask the Right Questions

Before engaging any administrative or facility agent, understand how a client’s needs are met through the role of an agent.  Here are a few key questions to ask:

  1. Does the administrative or facility agent offer specialized services?
  2. What is the turnaround time for inquiries, payments, notices, audit confirmations, and returning phone calls?
  3. How do you ensure deal information is accurate and correct?

Performing some due diligence before selecting an agent could save you from unforeseen stress down the road. 

A third-party administrative agent should be your first instinct.

The agent is an intermediary between the borrower and the lender. While a third-party agent offers a seamless and efficient option to carry out the requirements of a loan agreement, understanding the functions of the agent ahead of time will facilitate the transaction. 

A third-party agent should not be conflicted or biased when serving in the role. Outsourcing this role to a third party will free up lenders and borrowers to focus on their next transactions.

Jennifer Anderson

Senior Director, Loan Agency Relationship Management 612.509.2321

Jennifer is a relationship manager for the Loan Agency Group for SRS Acquiom. She works on syndicated loan transactions where SRS Acquiom acts as the administrative agent and/or collateral agent for the Loan Agency transactions.

Before joining SRS Acquiom, Jennifer was a relationship manager in the Loan Agency Group with Wilmington Trust, N.A. Jennifer began her 10-year career at Wilmington Trust working in human resources for the first two and a half years. She then transitioned to working as a client associate with the Default Bankruptcy Group, before earning a relationship manager position for the group.

Prior to working at Wilmington Trust, Jennifer worked in various human resources roles with AIG in Wilmington, Philadelphia, and New York City.

Jennifer has her CCTS certification. She received her B.S. in human resources management from Wilmington University in New Castle, Delaware.

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