Best Practices: SOP Refinance Rules
Under certain circumstances, SBA guaranteed loans may be used to refinance existing debt. Such debt may be in the form of short or long term debt structured with a demand note or balloon payment, debt with an interest rate that exceeds the SBA maximum rate (based on size, term, and 7(a) processing method), credit card ... Read More
Best Practices: Deposit Accounts as Collateral – What happens if the account is garnished by a judgment creditor?
It is not uncommon for a lender to take a security interest in a deposit account of a borrower as security for a loan. Normally, the lender will maintain the deposit account at their bank and permit the borrower to utilize the account so long as the borrower is not in default under the lender’s ... Read More
Best Practices: Reviewing Management Agreements under SOP 50 10 5(J)
All SBA loan applicants and their affiliates must be small, when aggregated together, under SBA size requirements to participate in SBA’s lending programs. In determining whether affiliation exists, SBA analyzes an applicant’s ownership, management, and franchise, license or other agreements and relationships at the time of application. One type of affiliation may arise where a ... Read More
Best Practices: Revised SBA Form 1919 Analysis: Part 3 – Principals of the Business
Pursuant to SBA Information Notice 5000-17007, effective October 12, 2017, SBA has issued a revised Form 1919. As mentioned previously, the form has been modified in order to provide greater clarity to the questions and make the form more user friendly for borrowers. Section II of the form has been added for questions that specifically ... Read More
Best Practices: The Value of a Payoff Letter
Because SBA loans are often under-collateralized, the SBA guaranty is frequently the most valuable piece of “collateral” to a lender. Because of this, it is imperative that lenders avoid the common issues that can lead to impairment of the guaranty, whether in the form of a repair or a denial. Failure to obtain the proper ... Read More
Best Practices: The United States Department of Treasury Wants You – To Help Fight Financial Crimes by Obtaining Beneficial Ownership Information
In response to concerns regarding the use of legal entities to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes, The United States Department of Treasury (“USDT”) has issued a new rule under the Bank Secrecy Act (“BSA”) to clarify and strengthen customer due diligence (“CDD”) requirements. This CDD ... Read More