Best Practices: SNDA Fundamentals
Lenders financing the acquisition of real property or leasehold improvements should consider obtaining a Subordination, Non-disturbance, and Attornment Agreement (“SNDA”) when third party tenants lease a portion of the subject property. A SNDA can ensure that a lender’s lien on property required to be taken as collateral by SOP 50 10 5(I) is senior to ... Read More
Best Practices: Recovering Assets That Have Been Fraudulently Transferred
In making SBA loans, both the SBA and the lenders require that adequate collateral be provided by the borrower to secure the loan. Security interests are obtained in the borrower’s property. Additionally, a majority of SBA loans are also secured by guarantees by persons who are not parties to the loan, mostly individuals who have ... Read More
Best Practices: Getting the SBA Fundamentals Right
SBA lenders are often overwhelmed by the myriad rules, regulations and guidelines associated with SBA lending. However, by focusing on a handful of core concepts, Lenders can develop the tools which, when applied consistently to their SBA operations, will help them to understand SBA requirements in various situations and circumstances, and which will lead them ... Read More
Best Practices: Seller Notes in Business Acquisitions
Under the Change of Ownership section of SOP 50 10 5(I), when the purchase price of a business includes intangible assets in excess of $500,000.00, the borrower and/or seller must provide an equity injection of 25% or more of the purchase price for the application to be processed under delegated authority. If seller is contributing ... Read More
Best Practices : Why Lenders Should Consider Buying Back SBA Loans From The Secondary Market
For those lenders who sell a portion of their SBA guaranteed loans on the secondary market, they may choose to repurchase the loans or require the SBA to purchase. In the later case, the lenders benefit by not needing to extend cash immediately. However, for the reasons set forth, we recommend that, when feasible, lenders ... Read More
Best Practices: “Other” Business Insurance
Lenders participating in SBA lending programs are required to obtain evidence of hazard insurance, including flood insurance, if applicable, on any real or personal property collateral securing its loans. Most lenders also obtain evidence of general liability insurance and worker’s compensation insurance as a matter of prudent lending. Every small business is unique and there ... Read More