Best Practices: Protecting Your Mortgage’s Priority From Mechanic’s Liens
Mechanic’s lien laws are statutes that exist in every state to protect contractors, subcontractors and material suppliers that furnish work or materials to construction projects. As the name suggests, these laws allow contractors, subcontractors and suppliers to impose a lien on an owner’s property if the property has been improved by the goods, labor or ... Read More
Best Practices: The Importance of a Closing Protection Letter
Most participating lenders are aware that under the current version of the Standard Operating Procedure 50 10 6 (“SOP”), U.S. Small Business Administration (“SBA”) loan proceeds may be used to finance the acquisition of commercial real estate. Compulsory evidence of lien priority on these types of transactions often require the lender obtain a loan title ... Read More
Best Practices: When to require a Borrower Opinion of Counsel in a 7a loan
Legal opinion letters are an integral part of business and commercial transactions and financing. In fact, on large dollar 7(a) loans or complex change of ownership transactions, Lenders often require Borrower Opinion of Counsel letters. When written by experienced attorneys, these letters help alleviate Lender concerns about the Borrowers’ and Guarantors’ legal status, smooth the ... Read More
Best Practices: Prohibition Against Refinancing Short-Term Interim Loans Revisited by SBA
Last October, SBA added a new provision to its SOP prohibiting lenders from using a 7(a) loan to “refinance a short-term obligation that was created with the intent of refinancing it with a 7(a) loan.” SOP 50 10 6, Part 2, Section B, Chapter 1, Paragraph A.1.b.iii., page 228. The change in the SOP was ... Read More
Best Practices: Getting the SBA Fundamentals Right
In these uncertain times, SBA lenders are often overwhelmed by the myriad rules, regulations and guidelines associated with SBA lending. However, by focusing on a handful of core concepts, Lenders can develop the tools which, when applied consistently to their SBA operations, will help them to understand SBA requirements in various situations and circumstances, and ... Read More
Best Practices: Why do we need landlord waivers anyway?
SBA requires landlord waivers whenever SBA loans are secured with business personal property which is located at a leased location in order to protect the SBA and maximize any recovery when collateral must be liquidated. Lenders often ask us for guidelines as to when and under what circumstances landlord waivers may be waived. Unfortunately, there ... Read More
