Best Practices: A Refresher on Source of Equity Injection
For SBA lenders, proving equity injection is a critical part of the due diligence process since failure to properly do so can result in a denial of the guaranty. With that in mind, below are some tips on avoiding common pitfalls related to equity injection documentation. SOP 50 10 5 (H) requires that lenders obtain ... Read More
Best Practices: Qualified Retirement Accounts and SBA Lending
Many SBA Borrowers provide equity injection in the form of qualified rollovers of their existing 401(k), profit sharing plan or other qualified retirement account (collectively referred to herein as QRAs). To document this form of equity injection, lenders must conduct a unique analysis. Lenders must first be able to identify a QRA rollover. In a ... Read More
Best Practices: A Refresher on Indemnification Clauses in Purchase Agreements
When financing the purchase of a business, one of the most important pieces of due diligence that a lender collects is the purchase agreement. Most lenders review a purchase agreement and its exhibits for details such as the parties to the purchase agreement (to confirm that the buyer is the same entity or individual as ... Read More
Best Practices: When Should Borrowers Engage Legal Counsel
Before, during and after the commitment phase on any loan, your client will undoubtedly have numerous questions about the process, costs, and time-frame for closing the loan. One common question is whether the borrower should engage an attorney to assist with the loan closing process. Ultimately, only your clients can decide whether they need an ... Read More
Best Practices: Understanding Cash Collateral in Bankruptcy
One of the most important bankruptcy concepts that a lender needs to understand is so-called “cash collateral.” The term cash collateral has a specific meaning in bankruptcy and there are Bankruptcy Code provisions that govern the parties’ respective rights in that collateral. Understanding what cash collateral is and how it is treated in bankruptcy can ... Read More
Best Practices: Having a Second Set of Eyes Review Your Loan Documents is Always A Good Idea
Nowadays we live in a fast-paced world where everyone wants everything done yesterday. There is no exception for lenders and their clients who want their loans closed as quickly as possible. In today’s world, we also have access to a whole host of products to assist us with meeting those tight deadlines. For lenders, there ... Read More
