Best Practices: The Survey Exception
The U.S. Small Business Administration (“SBA”) National 7(a) Authorization Boilerplate Version 2018 (“Boilerplate”) indicates SBA lenders must obtain a lien on 100% of the interest in the Borrower’s collateral and properly perfect all lien positions as stated in the SBA Loan Authorization. With respect to real estate collateral, Appendix B of the Boilerplate identifies eight ... Read More
Best Practices: Proposed Rule Change: Permissible Fees
On September 28th, the SBA issued proposed rule RIN: 3245-AG74 (“Proposed Rule”) which proposes several changes to SBA’s current regulations. One such change would affect the type and amount of fees that a Lender or Agent may collect from a small business loan applicant (“Applicant”). In response to finding that there is a significant amount ... Read More
Best Practices: Enforcing Assignments of Leases and Rents in Bankruptcy Proceedings
As part of most institutions’ prudent lending practices, due diligence processes, and SBA program requirements, lenders obtain executed assignments of leases and rents from their borrowers. These agreements entitle lenders to any income derived from the CRE (from leases, rents, etc.) if the borrower defaults on the loan. However, what most lenders don’t know is ... Read More
Best Practices: Proposed Rule: Potential Reinstatement of the Personal Resource Test
On September 28, 2018, SBA issued proposed rule RIN: 3245-AG74 (“Proposed Rule”), which proposes changes to several aspects of SBA’s current regulations. Lenders have 60 days, or until November 28, 2018 to submit comments to the Proposed Rule for consideration. One notable proposal is the reinstatement of the personal resource test. Prior to 2014, the ... Read More
Best Practices: Getting to Know SBA’s Updated Form 159
On September 14, 2018, SBA issued Information Notice 5000-18012 announcing an updated SBA Form 159 “Fee Disclosure and Compensation Agreement”. The majority of the revisions were designed to promote transparency for loan Applicants and to provide greater clarity to Lenders and Agents regarding SBA’s disclosure requirements. Lenders must begin using the updated Form 159 immediately, ... Read More
Best Practices: Determining Affiliation of Nontraditional “Franchise” Agreements under SOP 50 10 5 (J)
In my December 13, 2017 article, I provided an overview of the franchise review process under the SOP 50 10 5(J). See https://starfieldsmith.com/article/best-practices-franchise-reviews-under-sop-50-10-5j/. For SBA loan applicants operating under traditional franchise agreements, the process for determining eligibility and affiliation is relatively straightforward. Under the SOP 50 10 5 (J), SBA maintains a list of eligible ... Read More
