With no end in sight to the COVID-19 pandemic, SBA lenders would be wise to address the rapidly rising number of small business loan failures. While the SBA has been providing Section 1112 debt relief since April, these payments are scheduled to end in late September, forcing lenders to examine stressed loan portfolios. It is therefore imperative for SBA lenders to implement innovative procedures and policies today in order to assist borrowers with workouts, when appropriate, and otherwise protect SBA loan guarantees attached to their 7(a) loans.
Proactive and prudent lenders should consider taking the following steps now in order to protect their loan portfolios:
The current economic emergency will require prudent lenders to be creative and proactive in order to protect their institutions in the times ahead. Those lenders who seek to protect their SBA guarantees must act in a commercially reasonable and prudent manner which means getting ahead of the curve now, so that they will be able to manage the expected upcoming defaults. If you need us, we can help. For assistance, contact the attorneys at Starfield & Smith at 215.542.7070.
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