Best Practices: SOP 50 10 6 Clarifies Requirements for SBA Loans Involving 401(k) Plans
Prior to the release of SOP 50 10 6, there had been a lot of confusion surrounding the processing of Small Business Administration (“SBA”) loans in which the borrower is owned by a 401(k) plan. SOP 50 10 6, which became effective October 1, 2020, clarifies some of the confusion. SOP 50 10 6 contains ... Read More
Best Practices: Which SBA PPP Loan Forgiveness Application Form Should Be Completed?
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), was signed into law, and the Paycheck Protection Program (“PPP”) was included as part of that legislation. The initial PPP Loan Forgiveness Application, the SBA Form 3508, was issued on May 15, 2020, requiring all documentation to support the borrower’s payroll ... Read More
Best Practices: SBA issues formal guidance on Change of Ownership Transactions involving PPP Loans but questions remain
Over the past several months, with no formal guidance in place, SBA lenders have been operating on an ad hoc basis when financing change of ownership transactions where a PPP loan is involved. In order to assist small businesses, many lenders, adopted prudent lending practices, such as the establishment of escrow accounts, and otherwise operated ... Read More
Best Practices: Certifying Records Requested in a PPP Loan Investigation
Considering the billions of dollars in PPP loans that Lenders made without being able to employ its customary underwriting and due diligence procedures, it is not surprising that investigations are popping up all over the place into possible fraud and abuse by borrowers. Because the SBA has been designated to administer the PPP loan program, ... Read More
Best Practices: Servicing and Liquidating PPP Loans
Lenders face uncharted territory when servicing and liquidating (“S&L”) Paycheck Protection Program (“PPP”) loans. This article explains the unique challenges lenders face with these unsecured facilities, and offers suggestions until SBA offers formal guidance geared to PPP S&L issues. The CARES Act’s PPP was designed by Congress to preserve employment by providing capital to ... Read More
Best Practices: Last Call for Section 1112 Closings
Lenders and borrowers only have a few days left to take advantage of the subsidy loan payments provided by Section 1112 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act acknowledged that all borrowers were adversely affected by COVID-19 and provided relief to borrowers in the form of loan ... Read More
