Best Practices: Franchise Reviews under SOP 50 10 5(J)
Effective January 1, 2018, SBA issued new rules to further simplify the franchise affiliation review process in SOP 50 10 5 (J). Lenders will no longer need to review franchise documentation for affiliation or eligibility. SBA has created a new SBA Franchise Directory (“Directory”) that will be accessible at www.sba.gov/for-lenders, which will include pertinent information ... Read More
Best Practices: Debtor Filed UCC Terminations
A primary reason for a repair of the SBA guaranty is a lender’s failure to obtain the required lien position on collateral. When a lender fails to obtain the required lien position and suffers a loss as a result the SBA will typically recommend a repair by deducting a specific dollar amount paid on the ... Read More
Best Practices: Revised Collateral Requirements with the Release of SOP 50 10 5 (J)
The Small Business Administration (“SBA”) has released SOP 50 10 5 (J), which takes effect on January 1, 2018. The new SOP sets forth changes with respect to franchise agreements, management agreements, equity injection requirements, the EPC rule, credit elsewhere, eligibility and collateral requirements, among other changes, many of which are beneficial to lenders and ... Read More
Best Practices: SBA Considerations for Forbearance Agreement Terms
Lenders should consider entering into a forbearance agreement when liquidating SBA guaranteed loans. These agreements are valuable tools which may permit successful workouts instead of lenders having to resort to foreclosure proceedings. In the proper circumstances, foreclosure agreements may maximize a lender’s recovery by reducing expenses and accelerating recoveries. Forbearance agreements, however, present special requirements ... Read More
Best Practices: Utilizing an Environmental Escrow Agreement
The Standard Operating Procedures 50 10 5(I) (the “SOP”) requires lenders to perform an environmental investigation on all commercial property securing a Small Business Administration (“SBA”) 7a loan. Before a 7a loan can be disbursed, the lender – and for general processing (“GP”) loans, the SBA – must believe that either (i) there is no ... Read More
Best Practices: SOP 50 10 5 (J) and Its Updated Equity Injection Requirements
If you’re a Small Business Administration (“SBA”) lender, add to your list of New Year’s resolutions becoming familiar with Standard Operating Procedure (“SOP”) 50 10 5 (J). Announced October 16, 2017, SOP 50 10 5 (J) becomes effective January 1, 2018. SOP 50 10 5 (J) includes substantive changes to the SBA’s equity injection requirements ... Read More
