Best Practices: Change of Ownership – Partner Buyouts
As part of its overall goal of increased oversight and enhanced performance of its portfolio, the SBA has tweaked its flagship 7(a) lending program. In an effort to encourage borrowers to put more skin in the game, the rules require greater use of cash (rather than debt) to finance partner buyouts. In the SOP 50 ... Read More
Best Practices: Getting the SBA Fundamentals Right #3
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: Highlights of the new SOP 50 10(5)(K)
On February 15, 2019, SBA issued SOP 50 10(5)(K) (“New SOP”) which will take effect on April 1, 2019. This article touches upon a few of the more substantive changes in the New SOP. For a more detailed list of all the changes and clarifications, see SBA Information Notice 5000-19004 dated February 15, 2019. The New SOP has been ... Read More
Best Practices: The Importance of Reviewing Key Deal Terms in Purchase Agreements
Loan proceeds under the Small Business Administration’s (“SBA”) 7(a) loan program are often used to finance a complete change of ownership transaction, which can be in the form of a stock purchase or an asset purchase. Typically, lenders review the purchase agreement to confirm (i) the buyer is the same entity or individual as the ... Read More
Best Practices: Jurisdiction, Venue and Choice of Law: Why Does Where Matter?
Buried in the terms of a lender’s loan documents there are several provisions that are usually titled “jurisdiction, venue and/or choice of law.” It is important for lenders to review these terms to ensure that the provisions protect the lender and the lender’s interest in the collateral securing the loan, especially in the event of ... Read More
Best Practices: A Review of Life Insurance Requirements
When underwriting an SBA loan, a Lender has many different issues to consider. The Lender must look to the Borrower and decide whether or not lending money to the Borrower is an acceptable risk. In addition to the real estate, personal property, and other types of collateral the Lender uses to secure the loan, the ... Read More
