Best Practices: The Nuances of SBA Form 159
Recently my colleague, Norman E. Greenspan, wrote an article about the newly enhanced role of the Office of Credit Risk Management (“OCRM”) when it comes to evaluating lenders’ conduct in complying with the Standard Operating Procedures (“SOP”) and other Small Business Administration (“SBA”) rules, regulations and guidelines. The purpose of this article to expand on that point in ... Read More
Best Practices: The “Art” of Ordering Public Records Searches #2
SBA Lenders often wonder about what public records searches they must order as part of their due diligence when processing an SBA loan. Unfortunately, the SBA does not specify any requirements for performing searches, instead specifying the requirements for collateral and underwriting and leaving it up to lenders to engage in “prudent lending” to fulfill ... Read More
Best Practices: Understanding the Office of Credit Risk Management’s Newly Enhanced Role in the SBA Regulatory Scheme
Last year, the President signed into law 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 Small Business Act is the statute that created and governs the Small Business Administration. Initially, the focus of the guaranteed lending ... Read More
Best Practices: Pitfalls of Equity Injection Documentation
For SBA lenders, proving equity injection is a critical part of the due diligence process since failure to properly do so can result in a denial of the guaranty on early default loans. With that in mind, below are some tips on avoiding common pitfalls related to equity injection documentation. SOP 50 10 5 (K) ... Read More
Best Practices: Leasing Restrictions under the new SOP 50 10 5(K)
Effective April 1, 2019, SBA’s SOP 50 10 5(K) contains provisions restricting SBA borrowers from leasing real estate acquired with SBA loan proceeds to any business that a borrower knows is engaged in any activity that is illegal under federal, state or local law or any activity that can be reasonably determined to support or ... Read More
Best Practices: Changes to the 504 Loan Program under SOP 50 10 5(K)
SOP 50 10 5(K) will take effect on April 1, 2019. This article touches upon a few of the changes to the 504 Loan Program contained in Subpart C of the new version of the SOP. For a more detailed list of all the changes and clarifications, see SBA Information Notice 5000-19004 dated February 15, ... Read More
