Best Practices: Consumer Financial Protection Bureau Issues Proposed Rule for Collecting and Reporting Small Business Lending Data
On September 1, 2021, the Consumer Financial Protection Bureau (CFPB and/or Bureau) issued a notice of proposed rulemaking (NPRM) requesting public comment on its proposed rule to implement Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).[1] The publication of the NPRM in the Federal Register on October 8, 2021, ... Read More
Best Practices: Documenting Disbursement of 7(a) Loan Proceeds
In order to properly document and close an SBA 7(a) loan, lenders must exercise care to ensure that loan proceeds are disbursed in strict accordance with the lender’s credit memo, SBA loan authorization, and SBA Form 1050. SBA cites failure to use loan proceeds as required by the SBA loan authorization as one of the ... Read More
Best Practices: Flood Insurance Requirements under 50 10 6
Weather disasters and flooding can significantly impact a small business’s viability. When businesses financed with SBA loans suffer damages from flooding, losses can extend to the lenders that advanced the loans as well as to the SBA. Therefore, it is crucial for SBA lenders to understand when flood insurance needs to be obtained under the ... Read More
Best Practices: PPP Loan Lender Liability
Shortly after the CARES Act was enacted, and the PPP loan program began, the lawsuits started. From the beginning, there was concern that the PPP loan demand would exceed the amount of funding resulting in legal battles. Class action lawsuits were filed claiming that the “first come, first served” rule was being ignored by large ... Read More
Best Practices: SBA Guaranty Denials and the New Process for the Final Notice
Any lender that has received a recommendation for a guaranty denial from the SBA is familiar with the process involved. A lender submits its guaranty purchase package to the Agency. In most cases, SBA honors the guaranty and will purchase the guaranteed portion of the loan. However, if it does not, a back and forth ... Read More
Best Practices: Considerations for SBA Loans Financing Improvements on Leased Land (Ground Leases)
When financing improvements on leased land, it is important to consider the ways in which an SBA lender can adequately secure its loan. The purpose of this article is to highlight the analysis the lender should complete and documentation the lender should obtain to remain in compliance with SBA rules and requirements when financing improvements ... Read More
