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SpotlightAttorney Spotlight 
Ethan Smith
Ethan W. Smith
Ethan focuses his practice in business law, with an emphasis on commercial lending, government guaranteed lending, mergers and acquisitions, real estate, contracts, commercial and corporate law. He is a closing attorney for various lenders nationwide. Ethan is also a designated closing counsel for several Certified Development Companies that operate in Pennsylvania, New Jersey and Delaware. In addition to representing commercial lenders, Ethan represents and counsels a number of small businesses in a variety of contexts, including mergers and acquisitions, corporate governance, and contract and real estate matters.

As a closing attorney for commercial lenders, Ethan prepares and reviews loan files for conventional, SBA 7(a) and 504, and USDA B&I loans, confers with loan processors and in-house counsel, and drafts, analyzes and negotiates loan documents. He has closed hundreds of government guaranteed commercial loans through the SBA 7(a) and 504 loan programs, through the USDA B&I program, and has closed numerous conventional commercial financing transactions, including asset-based, real estate, and factoring arrangements. Ethan has closed numerous complex commercial transactions, often involving multi-jurisdictional issues and collateral. As a licensed title agent in Pennsylvania and New Jersey, Ethan provides title insurance for commercial projects including purchases, refinancing and ground up construction. Through his underwriters' national networks, Ethan coordinates title insurance, escrow and closing services for his clients nationwide.
FeaturedArticleNew 7(a) Guaranty Purchase Package Tabs, by Kathleen G. O'Brien, Esq.
Katie Web Photo
 When an SBA loan defaults, Lenders must submit a purchase request to the SBA National Guaranty Purchase Center (NGPC).  NGPC requires lenders to submit their request using SBA's 10-Tab system.  During the last week of August, NGPC released an updated version of these tabs.  Many of the changes add further explanation and clarification to the 10-tab system, while other changes are more substantive and require Lenders to provide more information in their purchase package.  These revisions should allow the NGPC to have a better understanding of the loan file during the initial review without having to request additional information from the Lender.  While the new tabs may appear to place a greater burden on Lenders at the time of purchase, Lenders are not expected to provide anything that is not already required by the SBA Loan Authorization or the SOP 50 10 5(a).   The changes should ultimately make the purchase system more efficient and should improve processing times.  The updated tabs can be found here.

Below is a summary of the major changes:
Tab 3 - Eligibility
        A Certificate of No Change had been required if Borrower's business was a franchise that was listed on the Franchise Registry.  The new tabs explain that the purpose of this certificate is "to ensure that no changes to the agreement have occurred." 
Tab 5 - Settlement Sheets
        For loans made prior to August 1, 2008, a separate fully executed and itemized SBA Settlement Sheet (SBA Form 1050) and supporting documentation is required for each disbursement. 
        For loans made on or after August 1, 2009, a separate itemized Settlement Sheet is not required for each disbursement.  Only the initial SBA Settlement Sheet is required, but documentary evidence of disbursements, such as copies of cleared joint payee checks, a bill of sale, and/or paid invoices, is still required. 
Tab 7 - Early Default
        This tab now clarifies that IRS verification is not required when the purpose of the loan was to finance a start-up. 
        Lenders must provide a copy of a Standby Note, if applicable, in addition to the Standby Agreement.
        If a Statement of Personal History (Form 912) indicates that an individual borrower or guarantor is not a U.S. citizen, the Lender must provide a stamped USCIS INS Form G845. 
Tab 9 - Collateral Disposition
        Lenders must provide a liquidation report to date if liquidation is not complete. 
Tab 10 - General Information
        Lenders must "provide an explanation for why the business failed and/or the default occurred."
        This tab now explains that care and preservation of collateral (CPC) expenses that are supported by paid invoices will be reimbursed at the time of purchase if the expenses are "considered to be reasonable and prudent." 
        This tab now clarifies that "...expenses are to be deducted from recoveries and applied to the principal balance on the transcript.  If, at the time of purchase, there are no recoveries, SBA may choose to delay reimbursement until such recoveries exist." 
NGPC also published a new set of tabs for "Care and Preservation of Collateral."  If Lenders are requesting reimbursement for CPC expenses, they should complete the additional tabs and attach them to the 10 tab guaranty purchase package.  These CPC tabs provide guidance and a structural framework for Lenders to track CPC expenses.  The tabs can be found here.

Questions about the new guaranty purchase package 10-tab system and the CPC tabs can be directed to the author at 215-542-7070 or
HerndonDid you know...
...that Starfield and Smith, P.C. assists lenders in preparing 10-tab guaranty packages?
For more information on this and the other services Starfield and Smith, P.C. provides to its lender clients, please contact Ethan W. Smith at (215) 542-7070 or email Ethan at
SeminarsEventsUpcoming Seminars and Events

"Fundamentals of SBA Lending: Documenting, Closing & Funding the SBA Loan"
Presented by Ethan Smith and Kristina Rozek for Lorman Education Services
Date: September 23, 2009
Time: 1:00 - 2:30 PM EDT
Location: Webcast

For more information and to register, click here.

"Closing & Funding the SBA Loan"
Presented by David W. Starfield for NAGGL
Date: September 23 & 24, 2009
Location: Dallas, TX
For more information and to register, click here
To use NAGGL's online registration system, click here.
"Guaranty Purchase Process & Preserving the Guarantee"
Presented by David W. Starfield for NAGGL
Date: September 25, 2009
Location: Dallas, TX
  For more information and to register, click here
To use NAGGL's online registration system, click here.
"Understanding the SOP 50-10"
Presented by Michele Courneya for the NAGGL Annual Conference
Date: October 29, 2009
Location: Phoenix, AZ

For more information and to register, click here
To use NAGGL's online registration system, click here.
"Guarantee Purchase Process and Package Submission"
Presented by David W. Starfield for the NAGGL Annual Conference
Date: October 30, 2009
Location: Phoenix, AZ
For more information and to register, click here
To use NAGGL's online registration system, click here

For additional information, please contact us.
ContactInfo Starfield & Smith, P.C.
Pennsylvania Office
501 Office Center Drive,
Suite 350 | Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723
Minnesota Office
1516 West Lake Street, Suite 303 | Minneapolis, MN 55408
phone: (612) 208-0877 | fax: (215) 542-0723
 Loan Documentation | Closing | SBA Guaranty Repurchase
Regulatory Compliance | Franchise Eligibility
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