Best Practices: Civil Versus Criminal Liability for False Claims
At the August 2016 America East Conference for SBA Lenders, a general session was devoted to “Fraud Trends, Risk Factors and Tips on How to Avoid Becoming a Victim.” Part of this presentation was an overview of the federal False Claims Act, 31 U.S.C. §3729 et seq., and its application to the SBA lending process. ... Read More
Best Practices: Commercial Real Estate Appraisals for SBA 7A Loans and Non Arm’s Length Transactions
This article will summarize commercial real estate appraisal requirements for SBA 7a loans, and specifically discuss the requirement applicable to a business real estate appraisal when there is a change of ownership within the 36 months prior to the date of the loan application for the related real estate purchase. One of the primary underwriting ... Read More
Best Practices: A Refresher on Liquidation Requirements for Submitting Litigation Plans to SBA
One of the benefits of the SBA Loan program, along with the government guaranteed portion of the loan, is that there are other expenses that the SBA will participate in, that a Lender would typically be expected to pay itself in a conventional loan in order to recover and liquidate its collateral and pursue any ... Read More
Best Practices: A Refresher on Source of Equity Injection
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. With that in mind, below are some tips on avoiding common pitfalls related to equity injection documentation. SOP 50 10 5 (H) requires that lenders obtain ... Read More
Best Practices: Qualified Retirement Accounts and SBA Lending
Many SBA Borrowers provide equity injection in the form of qualified rollovers of their existing 401(k), profit sharing plan or other qualified retirement account (collectively referred to herein as QRAs). To document this form of equity injection, lenders must conduct a unique analysis. Lenders must first be able to identify a QRA rollover. In a ... Read More
Best Practices: A Refresher on Indemnification Clauses in Purchase Agreements
When financing the purchase of a business, one of the most important pieces of due diligence that a lender collects is the purchase agreement. Most lenders review a purchase agreement and its exhibits for details such as the parties to the purchase agreement (to confirm that the buyer is the same entity or individual as ... Read More