Best Practices: The Importance of Reviewing Key Deal Terms in Purchase Agreements
Loan proceeds under the Small Business Administration’s (“SBA”) 7(a) loan program are often used to finance a complete change of ownership transaction, which can be in the form of a stock purchase or an asset purchase. Typically, lenders review the purchase agreement to confirm (i) the buyer is the same entity or individual as the ... Read More
Best Practices: Jurisdiction, Venue and Choice of Law: Why Does Where Matter?
Buried in the terms of a lender’s loan documents there are several provisions that are usually titled “jurisdiction, venue and/or choice of law.” It is important for lenders to review these terms to ensure that the provisions protect the lender and the lender’s interest in the collateral securing the loan, especially in the event of ... Read More
Best Practices: A Review of Life Insurance Requirements
When underwriting an SBA loan, a Lender has many different issues to consider. The Lender must look to the Borrower and decide whether or not lending money to the Borrower is an acceptable risk. In addition to the real estate, personal property, and other types of collateral the Lender uses to secure the loan, the ... Read More
Best Practices: General Title Exceptions – Part 1
As a follow-up to my article Best Practices: The Survey Exception, where I discussed deletion of the standard survey exception from an ALTA loan policy, this article is intended as a brief overview of some of the “general title exceptions,” which typically appear in one form or another on a title commitment for an ALTA loan ... Read More
Best Practices: A Refresher on EPC/OC Transactions
Typically, any small business applicant seeking SBA financing must be an active operating company. One exception to this general rule pertains to Eligible Passive Companies. The Eligible Passive Company (EPC) Rule is set forth in 13 CFR § 120.111, and is a narrowly construed exception to SBA regulations that prohibit financing assets which are held ... Read More
Best Practices: Things to Consider in the New Year
As we begin the new year, here are some items of interest that lenders should keep an eye out for in 2019: First, it is important to make sure that you are using the most recent versions of SBA’s forms and incorporating required language into your loan documents. The SBA released a new SBA 7(a) ... Read More