Best Practices: Hit Send With Caution: Electronic Communications Can Modify a Written Contract and Lead to Results that Are Far from “Awesome!”
It has been decided that informal communications, such a instant message (“IM”), can modify a signed contract. A Florida Court, applying Delaware law, held that an IM effectively amended a written contract, which contained a provision that required all changes to be made both in writing and signed by the parties. The result: a judgment ... Read More
Best Practices: Navigating Through the SBA Export Express Loan Program
The SBA Export Express Program provides for a maximum loan or line of credit amount of $500,000.00 with a 90% guaranty for loans of $350,000 or less and 75% guaranty for loans greater than $350,000. Lenders must obtain a signed Export Express Supplemental Guaranty Agreement in order to engage in the Export Express Program. As ... Read More
Best Practices: Secondary Collateral Real Property – Title Search or Title Policy?
The Small Business Administration (the “SBA”) generally expects lenders to obtain a policy of title insurance for primary collateral real property where SBA loan proceeds are being used to purchase real property or refinance a loan secured by real property. However, the SBA has no set requirements for title insurance, and lenders may not be ... Read More
Best Practices: Clarification of 25% Contribution in a Partner Buyout
As stated in the SBA Standard Operating Procedures (SOP), if the purchase price of a business includes intangible assets in excess of $500,000, the borrower (or seller, in the form a two year seller standby note) must contribute at least 25% of the purchase price of the business for the application to be processed under ... Read More
Best Practices: The “Art” of Ordering Public Records Searches
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: Executed Purchase-Sale Agreements
Financing change of ownership transactions can present several unique challenges for lenders that are not part of loans for refinances or startups. From determining what searches are required to ensure the proper lien position, to dealing with the challenges posed by parties to the transaction whose timelines and expectations rarely align with those of the ... Read More