Best Practices: Change in Restriction on Uses of Proceeds under the SBA Proposed Rule
On October 26, 2022 Volume 87, No. 206 of the Federal Register contained a Notice of Proposed Rulemaking on Affiliation and Lending Criteria for the SBA Business Loan Programs. The purpose of the proposed Rule is to streamline and modernize regulations on lending criteria and loan conditions for the 7(a) and 504 loan programs to ... Read More
Best Practices: How to Avoid Common SBA Loan Closing Pitfalls
In an effort to meet the “closing deadline” desired by the small business borrower, lenders may feel the need to rush the closing and overlook critical housekeeping steps. When implemented and adopted, these “steps” help to ensure that lenders’ SBA loan files are complete, accurate, and free from inconsistencies. When overlooked, file deficiencies arise which ... Read More
Best Practices: Updated Lender Servicing Responsibilities for PPP Loans
On October 5, 2022, the SBA released Procedural Notice 5000-835955 (Extension and Revision of SBA Guidance on Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans) or the “Notice.” The Notice both extends and updates the guidance which was contained in SBA Procedural Notice 5000-812316, “SBA Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans” ... Read More
Best Practices: Dealing with Federal Tax Liens
When reviewing search results in connection with extending an SBA loan, lenders may come across a recorded Notice of Federal Tax Lien (NFTL) filed against a borrower or guarantor. Understanding the options for addressing a federal tax lien is important for credit underwriting and SBA compliance. A federal tax lien is created when a taxpayer ... Read More
Best Practices: Loan Servicing Request to Substitute Real Estate Collateral Part 2
Our June 15, 2022 article discussing servicing requests involving real estate collateral for SBA loans generated spirited discussion and feedback from several readers. See Best Practices: SBA Loan Servicing Request to Substitute Real Estate Collateral | Starfield & Smith Attorneys at Law (starfieldsmith.com). At the time of our prior article, due to the low interest ... Read More
Best Practices: The Nuances of Documenting Credit Not Available Elsewhere
Before any lender may finance an SBA guaranteed loan, it must assure compliance with SBA’s “credit elsewhere test.” Compliance is a critical eligibility prerequisite. The test is foundational and one that justifies the need for SBA financing. It is for this reason that SOP 50 10 6 includes very specific documentation requirements. See SOP 50 ... Read More