Best Practices: Use Loan Proceeds to Refinance Existing Debt
When SBA lenders use loan proceeds to refinance existing debt, there are various requirements that must be met for the loan to be eligible. SOP 50 10 5 (H), Subpart B, Chapter 2, Paragraph IV. E sets forth these requirements. Not only is it imperative to make sure the debt being refinanced is eligible for ... Read More
Best Practices: Understanding the Automatic Stay in Bankruptcy
When a commercial loan goes into default, it is not uncommon for the borrower or guarantor (or both!) to enter bankruptcy. A bankruptcy filing by the borrower or guarantor has serious repercussions for a lender seeking to liquidate its collateral. The most serious and immediate of these repercussions is the automatic stay imposed under Section ... Read More
Best Practices: What Every Witness Should Know Before Giving A Deposition
As with most litigation, most of the time and expense is incurred in the pre-trial phase known as discovery. During discovery, the parties to the lawsuit have the opportunity to obtain relevant information from each other, and from persons who are not parties to the lawsuit. The most likely sources of useful information are documents, ... Read More
Best Practices: Liquor License Liens
When financing a start-up or business acquisition, lenders typically require a lien on the business assets of the borrower as collateral. If the borrower operates a restaurant serving alcohol or a retail store selling alcoholic beverages, then the lender should determine, as part of its “prudent lending standards,” whether it should place a lien on ... Read More
Best Practices: Landlord Waivers for Leasehold Improvement Loans
According to Chapter 5, Section V of SOP 50 10 5(H), when substantial loan proceeds from a U.S. Small Business Administration guaranteed loan are to be used for leasehold improvements or a substantial portion of the collateral of an SBA loan consists of leasehold improvements, fixtures, or equipment that will become affixed to real property, ... Read More
Best Practices: Lender’s Responsibilities for Disbursing an SBA Loan
One of the most important conditions in underwriting, documenting and properly closing an SBA loan is making sure that the use of loan proceeds complies with, and is subsequently disbursed, in the manner dictated by the SBA in the Loan Authorization. It is the responsibility of the Lender to ensure that all conditions are met ... Read More
