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 Attorney Spotlight |
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Kimberly A. Rayer
Kimberly concentrates her practice in the areas of financial services, commercial contracts, real estate and corporate law. Kimberly has extensive experience representing banks, financial institutions, as well as companies in connection with commercial financing transactions, including acquisition financing, asset-based financing, healthcare receivable financing and other secured transactions. She has experience with intercreditor relationships, as well as creditor's rights in bankruptcy. Kimberly also advises small businesses on corporate governance and transactional matters.
Kimberly is admitted to practice before the Supreme Courts of Pennsylvania and New Jersey and the Federal District Court for the Eastern District of Pennsylvania. She is a member of the Philadelphia Bar Association and the National Association of Government Guaranteed Lenders (NAGGL).
Kimberly is a graduate of Drexel University where she received a Bachelor of Science Degree, cum laude, and the James E. Beasley School of Law, Temple University, where she earned a Juris Doctor degree.
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GUARANTY PURCHASES: THE LATEST FROM HERNDON
By David W. Starfield
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Members who attended NAGGL's Annual Conference were treated to several presentations led by Vanessa Piccioni, Director of the National Guaranty Purchase Center ("NGPC" or "Center"). Ms. Piccioni provided pointers for lenders on how to prepare the submission package and get paid promptly . She emphasized that it was the Center's desire to stand by its "brand promise" by honoring the SBA loan guarantee whenever possible. Indeed, since centralization, Ms. Piccioni has made huge strides at making the NGPC more efficient through the use of a lender-friendly 10 tab submission system and by establishing a quality assurance policy forum. As SBA Administrator Karen Mills recently stated: "Our objectives are for every lender to feel completely confident in processes for originating, servicing and liquidating SBA loans and for the Agency to efficiently process and approve their purchase package requests if the borrower defaults."
What should lenders do to protect their loan guarantees? According to Ms. Piccioni, lenders should diligently follow the 10 tab submission system. And not just at the time of purchase. The system should also be used at the time of closing to insure that lenders have not missed critical issues or documents. By organizing their documents in a format consistent with the 10 tab system, lenders will have a much better chance of complying with SBA requirements and avoiding "material deficiencies." In addition, the Director advised lenders that, if they had questions on their submission packages, they should feel free to consult with their District Office's "brand manager," a designated representative who has been specially trained for this purpose. Ms. Piccioni also mentioned that lenders could improve their packages by completing and signing their transcripts of account and, in the case of early defaults, including all information required under tab 7.
SBA officials indicate that only one out of twenty packages result in repairs or denials to the SBA loan guaranty. However, for most SBA lenders, the 5% figure should be unacceptable - even one repair or denial is one too many. In order to reduce the number of repairs and denials, the Director has identified the following common major errors which should be avoided:
- Permitting intervening liens;
- Failing to follow the use of proceeds requirements in the loan authorization;
- During liquidation, failing to safeguard collateral to maximize recovery;
- Failing to prove the existence and source of equity injection;
- Failing to service the loans diligently; and
- Failing to insure that all eligibility requirements have been satisfied.
Even with Director Piccioni's successes, the SBA's guaranty purchase process still needs to improve in certain areas. Although the standard is necessarily subjective, the definition of material deficiency must be used only in "egregious circumstances." In addition, the franchise/fuel supply agreement queue continues to plague lenders on loans for which the guarantees should have been paid. Finally, the Inspector General is pursuing very old post purchase reviews which were not subjected to the same level of scrutiny which the Agency now requires. This investigation is unfair, onerous and, in certain cases, violates the federal 6 year statute of limitations.
If lenders make, close, service and liquidate loans properly, the 10 tab submission system will result in guarantee purchases within 45 days. As a lender, if you are unsure of whether your package is satisfactory, ask your questions before submission. NAGGL or your SBA brand managers are there to help. The folks at the Center can be your best friends, but only if you work within the system.
For more information on this and other SBA related topics, contact the author at dstarfield@starfieldsmith.com, or 215-542-7070.
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Did you know... |
...that Starfield and Smith helps lenders that are having problems getting their SBA Guarantees paid?
That's right! Over the past year, Starfield & Smith has helped numerous lenders recover in excess of
12.5 million dollars in SBA guarantees. Call 215-542-7070 for more information, or visit our website at www.starfieldsmith.com. Starfield & Smith does not offer any guarantee of case results. Prior results do not guarantee a similar outcome.
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Seminars and Events |
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SBA Franchise Eligibility Issues and Preserving the SBA Loan Guaranty: Guaranty Purchase Issues
Presented by David Starfield
Date: December 4, 2009
Location: Exton, PA
To register for this event, click here.
NAGGL Webinar: Ask the Lawyers--Avoid Closing & Documentation Pitfalls
When: December 8, 2009
Time: Noon-1:30 pm CST
Fee: $245 for Members, $395 Non-Members, $145 Govt
Starfield & Smith Instructor: David Starfield
David Starfield provides expert guidance and practical tips on how to avoid common pitfalls when closing and documenting SBA loans.
- Insurance (Hazard, Life, Title)Equity Injection and Allocation of Proceeds
- Landlord Waivers
- Franchises and Jobber Agreements
- Overcoming an SBA Recommended Repair or Denial
Download a registration form here. Register online by clicking here.
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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
Loan Documentation | Closing | SBA Guaranty Repurchase
Regulatory Compliance | Franchise Eligibility
Business Consulting
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