Best Practices: Deposit Accounts as Collateral – What happens if the account is garnished by a judgment creditor?
It is not uncommon for a lender to take a security interest in a deposit account of a borrower as security for a loan. Normally, the lender will maintain the deposit account at their bank and permit the borrower to utilize the account so long as the borrower is not in default under the lender’s ... Read More
Best Practices: Reviewing Management Agreements under SOP 50 10 5(J)
All SBA loan applicants and their affiliates must be small, when aggregated together, under SBA size requirements to participate in SBA’s lending programs. In determining whether affiliation exists, SBA analyzes an applicant’s ownership, management, and franchise, license or other agreements and relationships at the time of application. One type of affiliation may arise where a ... Read More
Best Practices: Revised SBA Form 1919 Analysis: Part 3 – Principals of the Business
Pursuant to SBA Information Notice 5000-17007, effective October 12, 2017, SBA has issued a revised Form 1919. As mentioned previously, the form has been modified in order to provide greater clarity to the questions and make the form more user friendly for borrowers. Section II of the form has been added for questions that specifically ... Read More
Best Practices: The Value of a Payoff Letter
Because SBA loans are often under-collateralized, the SBA guaranty is frequently the most valuable piece of “collateral” to a lender. Because of this, it is imperative that lenders avoid the common issues that can lead to impairment of the guaranty, whether in the form of a repair or a denial. Failure to obtain the proper ... Read More
Best Practices: The United States Department of Treasury Wants You – To Help Fight Financial Crimes by Obtaining Beneficial Ownership Information
In response to concerns regarding the use of legal entities to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes, The United States Department of Treasury (“USDT”) has issued a new rule under the Bank Secrecy Act (“BSA”) to clarify and strengthen customer due diligence (“CDD”) requirements. This CDD ... Read More
Best Practices: Financing Involving Historic Rehabilitation Tax Credits Now Eligible for 504 Loans
The revitalization of historic buildings can benefit a local community by creating new jobs in that community. These projects, however, frequently have higher costs, greater design challenges, and weaker market locations, which means they are not as attractive to lenders and investors. To combat this, federal historic tax credits were enacted to attract private capital ... Read More