Best Practices: Managing SBA Construction Loans in the Current Economic Environment
SBA lenders are receiving an unprecedented number of servicing requests on SBA construction loans due to lingering pandemic related and current economic difficulties. The COVID-19 pandemic has significantly impacted the construction industry, causing limited supplies of raw materials and rising prices for needed building components. Additionally, supply chain issues have resulted in stalled construction projects ... Read More
Best Practices: EIDL Lien Subordinations
Over the last couple of years, the COVID-19 pandemic and the current economic crisis have caused many small business owners to turn to SBA’s Economic Injury Disaster Loan (EIDL) program to help see them through the extraordinary challenges they face. Not surprisingly, many recipients of EIDL loans have required additional financing, beyond the EIDL loans, ... Read More
Best Practices: SBA Loan Servicing Request to Substitute Real Estate Collateral
In order to improve collateral coverage, lenders are often required to take real estate collateral owned by guarantors to secure their SBA loans. These liens tend to be junior in nature to first priority purchase money mortgages used originally by the guarantors to acquire the property. With low mortgage rates during the past few years, ... Read More
Best Practices: Documentation of Equity Injection from an Affiliate
Prudent lenders recognize that equity injection must be verified and sourced whenever injection is required on an SBA loan. It is often helpful to think of equity injection as new cash added to the project that is not on the applicant’s balance sheet prior to the equity requirement. Therefore, it is not uncommon for lenders ... Read More
Best Practices: When Can the Debtor Legally Terminate a UCC-1 Financing Statement?
Oftentimes, SBA loan proceeds are used to refinance business debt or finance the acquisition of business assets. When navigating these types of transactions, one of the most common pitfalls for lenders is obtaining and perfecting the correct lien position on the assets that were purchased or refinanced using SBA loan proceeds. Issues may arise about ... Read More
Best Practices: SBA 7(a) Loans – When to Require Lien Searches on Sellers – Part 2
This article is the second part in a series of articles on lien searches on sellers. For background, please see Part 1 in this series, Best Practices: SBA 7(a) Loans – When to Require Lien Searches on Sellers | Starfield & Smith Attorneys at Law (starfieldsmith.com). This article will examine the nuances in performing lien ... Read More