Best Practices: The Practical Implications of Landlord Waivers in Liquidation
The importance of a landlord waiver in a liquidation situation cannot be understated. Often, a landlord waiver agreement is viewed as just another document to collect in order to close a loan, but the terms of that agreement are of utmost importance to a lender in a liquidation situation. The SBA generally requires landlord waivers ... Read More
Best Practices: Estoppel Certificates
Prudent SBA lenders should be familiar with estoppel certificates and the circumstances when an estoppel certificate may be required or used to obtain factual information it can rely on prior to financing certain types of loans. An estoppel certificate is “[a] signed statement by a party (such as a tenant or a mortgagee) certifying for ... Read More
Best Practices: What is a Tax Clearance Letter and Why do we need one?
During the current economic climate, many SBA borrowers have chosen to structure their business acquisition deals as an asset purchase rather than a stock purchase. The primary motive cited by the borrowers for choosing an asset purchase versus a stock purchase structure is to avoid the liabilities of the seller. Although this reasoning is sound, ... Read More
Best Practices: SBA 7(a) Loans – When to Require Lien Searches on Sellers
Prudent SBA 7(a) lenders typically perform lien / UCC / judgment searches on sellers when there is a commercial real estate acquisition or a change in the ownership of a business. Unless such searches are undertaken, lenders risk that liens or other seller obligations could attach to seller’s property and be assumed by the borrower. ... Read More
Best Practices: OCRM Identifies Top Loan File Review Findings
On January 11, 2022, during the most recent SBA 7(a) Connect Quarterly Update, the Office of Credit Risk Management (OCRM) highlighted issues in all stages of the life of a loan – from origination through closing and servicing that resulted in findings during risk assessments reviews performed in fiscal year 2021. The most common deficiencies ... Read More
Best Practices: Affiliation Based Upon Identity of Interest
SBA lending, with its myriad rules, regulations and ever-changing guidelines, has always been a challenge for compliance-minded lenders. One of the most difficult SBA topics for lenders to deal with has been affiliation, with its multiple ways for businesses to be deemed affiliated with one another. Although complex, the rules concerning affiliation are usually somewhat ... Read More