Best Practices: Non-Compete Agreements: When Does a Lender Need One?
When a Buyer is considering acquiring a new business, both the Purchaser and Lender should consider whether the Seller or any of its key employees could pose a threat to the newly acquired enterprise. In order to protect the new venture, a non-compete agreement may be a useful tool to help ensure the new business’ ... Read More
Best Practices: Considerations for Complete Change of Ownership
Financing a business acquisition is an eligible use of SBA loan proceeds, provided, that certain conditions are met. SOP 5010(5)(K) states that a business acquisition must result in a 100% change of ownership, and the seller is required to divest his/her interests completely from the business (i.e. a partial sale to reduce seller’s interest in ... Read More
Best Practices: Untimely Notices of Commencement – Restoration of Priority in Florida
A Notice of Commencement recorded prior to your mortgage can wreak havoc on your construction loan. In Florida, before any work can begin to improve real property, a Notice of Commencement (“NOC”) must be recorded in the Public Records. Chapter 713, Fla. Stat.* Too often this requirement causes borrowers and their contractors to record the ... Read More
Best Practices: The Basics of Lender Service Provider Agreements
The recently revised Standard Operating Procedure 50 10 5(K) (“SOP”) defines the Lender Service Provider (“LSP”) Agreement as “a written contract between a Lender and an Agent who assists the lender with 7(a) loan program loan origination and servicing duties.” In assisting with loan origination and servicing duties, the LSP acts as an authorized representative ... Read More
Best Practices: Documenting Credit Not Available Elsewhere
The SBA program is deeply rooted in the idea in providing support only to “applicants for whom the desired credit is not otherwise available on reasonable terms from non-Federal sources.” 13 CFR §120.101. The credit elsewhere test has changed over time and lenders often have questions regarding how to properly document their credit elsewhere analyses ... Read More
Best Practices: Take the Opportunity to Comment on the SBA’s Most Recent Proposed Rules
Pursuant to the requirements of the Small Business 7(a) Lending Reform Act of 2018, Pub. L. 115-189 (“SBA Reform Act”) that amended the Small Business Act, 15 U.S.C. §651 et seq., the SBA published in the Federal Register proposed rules designed to implement the provisions of the SBA Reform Act. 84 Fed. Reg. 29092 (proposed ... Read More
