Best Practices: The Importance of Providing a Detailed Narrative in the Credit Memo When Documenting Credit Elsewhere
The importance of documenting one’s credit elsewhere (“CE”) analysis cannot be overstated. Arguably, no other provision of the Small Business Act has come under closer scrutiny. This is understandable, given that no applicant who may obtain CE on reasonable terms may participate in the SBA’s loan programs. The integrity of the core concept behind the ... Read More
Best Practices: Steps for a Successful Servicing Action
After a loan is closed and disbursed, a Borrower may make a request or circumstances may arise which require a modification to the loan. For any commercial loan, a servicing action should be considered and documented carefully and consistently with the Lender’s internal lending practices. For SBA loans, the bar is higher since Lenders must ... Read More
Best Practices: Affiliation… What the heck is an “Identity of Interest” anyway?
SBA lending, with its myriad rules, regulations and ever-changing guidelines, has always been a challenge for compliance-minded lenders. One of the most difficult SBA topics for lenders to deal with has been affiliation, with its multiple ways for businesses to be deemed affiliated with one another. Although complex, the rules concerning affiliation are usually somewhat ... Read More
Best Practices: Review of the Most Commonly Negotiated Points in Landlord Subordination Agreements
Many small businesses that seek financing under the SBA 7(a) Loan Program operate from buildings that are leased from a third-party landlord, which can take the form of stand-alone buildings, shopping centers or commercial office parks. These loans are generally underwritten on a cash-flow basis and the primary (or oftentimes the only) collateral is the ... Read More
Best Practices: The Small Business Reorganization Act of 2019
Until recently, Chapter 11 bankruptcy cases for small business debtors were lengthy and cost prohibitive. Congress aimed to change that through the passing of the Small Business Reorganization Act (the “Act”) Pub.L. 116-54, which was signed into law on August 23, 2019. The Act goes into effect 180 days from the date it was signed ... Read More
Best Practices: The Do’s and Don’ts of Refinancing Same Institution Debt under the SBA 7(a) Loan Program
In the SOP 50 10 5(K), the U.S. Small Business Administration (“SBA”) sets forth specific rules on refinancing same institution debt. If a lender is seeking to refinance its own loan with SBA-guaranteed loan proceeds , then the lender must process the loan through general processing (“GP”) unless one of two very specific exceptions apply. ... Read More
