Best Practices: The Importance of Certificates of Good Standing
Prior to the closing of an SBA loan, it is critical that lenders obtain appropriate documentation that the borrowing entity is in good standing. The best evidence to confirm active status and verify good standing is a Certificate of Good Standing (also sometimes known as Certificate of Existence) obtained through the Office of the Secretary ... Read More
Best Practices: Handling PPP Bankruptcies
As we near the first anniversary of the Paycheck Protection Program (“PPP”), it has become clear that this program was essential in helping millions of small businesses weather the storm of the COVID-19 pandemic. Unfortunately, it has also become clear that, despite the best efforts and intentions of Congress, the SBA, and the lending community, ... Read More
Best Practices: The Importance of “Foreign Qualification”
A startup company may elect to file its preliminary corporate documents, such as the articles of organization (limited liability company) or incorporation (C-corporation), in a state other than the one in which the company intends to conduct actual business operations. However, such companies, including Borrowers applying for SBA loans, must also be authorized to conduct ... Read More
Best Practices: Refinancing Interim Advances under SOP 50 10 6
In the most recent iteration of the SOP, the SBA added a provision prohibiting the use of loan proceeds when refinancing interim advances if those advances were made with the intent of being subsequently refinanced with a 7(a) loan. SOP 50 10 6, A.1.b.iii, page 228. For quite some time, however, the SBA has allowed ... Read More
Ethan Smith Interviewed by CNN
Philadelphia, PA – CNN interviewed Ethan Smith on the Paycheck Protection Program implemented in response to the Covid-19 pandemic. Ethan gave his insight on fraud committed in the PPP program as exemplified by an alleged scammer who was granted at least six Covid-19 bailout loans from the federal government. “There was no way to put ... Read More
Best Practices: Current Guidance on Compliance Checks Error and Hold Codes
On February 10, 2021 SBA issued Procedural Notice 5000-20092 regarding Revised SBA Paycheck Protection Platform Procedures for Addressing Hold Codes on First Draw PPP Loans and Compliance Check Error Messages on First Draw PPP Loans and Second Draw PPP Loans, which updates the previous SBA Procedural Notice 5000-20083, issued January 26, 2021. During the ... Read More