Best Practices: Equity Injection Requirements for Business Expansions
Lenders extending Small Business Administration (“SBA”) loans have now been operating under SOP 50 10 5 (J) since January 1, 2018. As most SBA lenders are aware, SOP 50 10 5 (J) included substantive changes to the SBA’s equity injection requirements for loans involving start-up businesses and/or changes of ownership. For a full discussion of ... Read More
Best Practices: Updated Guidance on SOP 50 10(5)(J) #2
On April 3, 2018 SBA issued Policy Notice 5000-17057. It provides guidance on different matters related to SOP 50 10 5(J) which became effective on January 1, 2018. Two significant matters addressed in the Policy Notice are modifications to (i) Credit Elsewhere analysis for owners (their spouses and their minor children) of the Applicant and ... Read More
Best Practices: Express Loan Credit Underwriting Requirements
Section 4 on page 180 of SOP 50 10 5(J) confirms that SBA Express lenders have authority to make credit decisions for Express loans without prior SBA review. This authority can allow the lender to process such loan applications quicker than general 7(a) loans, but also opens the lender up to a more thorough review ... Read More
Best Practices: Documenting Equity Injection from Affiliates in 7(a) Loans
Recently, we have been asked if equity injection from an applicant’s corporate affiliate can come in the form of a gift. The short answer is no. In addition to income and gift tax implications beyond the scope of this article, getting cash out of a corporation rarely takes the form of a gift, unless it ... Read More
Best Practices: Florida’s Fictitious Name Act: A discussion About Fictitious Names
While the following article is based upon the requirements of Florida’s Fictitious Name Act (see Florida Statutes §865.09), most states have their own fictitious name acts which have similar requirements. Therefore, this article is meant to be a general discussion as to what is a fictitious name, the reasons for filing a fictitious name, the ... Read More
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