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SpotlightAttorney Spotlight 
 
David Starfield
David W. Starfield, Esq.

David is the Managing Partner of Starfield & Smith, and was named the SBA's "Eastern PA Financial Services Champion of the Year" for 2009. He practices in the fields of banking, contracts, real estate, commercial, and corporate law.


David has been helping lenders to document, close, service and liquidate commercial loans for more than twenty years. As an attorney for commercial lenders, David documents and closes loans; performs franchise eligibility reviews; assists lenders with guarantee purchases; notifies in-house counsel of changes in banking regulations; and assists with transactions throughout the United States. As an attorney for small businesses, David assists with corporate governance issues as well as with sales and acquisitions.

David has participated in numerous contract seminars, including several on SBA loan documentation and guarantee purchase issues. He is a contributing writer for and a member of the Board of Directors' Executive Committee for the National Association of Government Guaranteed Lenders (NAGGL) and is a regular speaker on loan closings, documentation, franchising, guarantee purchases and legal issues associated with commercial lending. David has developed the Advanced SBA Loan Documentation and Closing, Efficiency in SBA Lending and Preserving the Guaranty courses offered by NAGGL. Currently, he serves on NAGGL's District III Liaison Committee.

He is a member of the bar of the Supreme Courts of the United States, Pennsylvania and New Jersey and is a member of the American Bar Association. He is also an Affiliate Member of the National Association of Development Companies (NADCO) and is a designated closing attorney under the SBA 504 Program. David has consistently been listed as a "Super Lawyer" by Philadelphia Magazine.

David is a graduate of the University of Southern California School of Law, Los Angeles, California where he received a Juris Doctor degree.

 

 

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Feature 

Best Practices: Business Valuations

By Katie G. O'Brien, Esq. 

Katie Web Photo
Katie G. O'Brien, Esq.
   

 

When financing a change of ownership, it is imperative that lenders establish the value of the business being purchased.  Business valuations allow borrowers and lenders to assess whether historic operations of the business being purchased, goodwill and tangible business assets other than real estate support the purchase price.

 

When does the SBA require business valuations?

The SBA requires lenders to obtain an independent business valuation from a "qualified source" in the following two circumstances:

  • The amount being financed (including any 7(a), 504, seller or other financing, but excluding the appraised value of real estate and equipment being financed) is greater than $250,000.00; or
  • There is a close relationship between buyer and seller, such as a change of ownership between business partners or family members

If, however, the amount being financed, excluding the appraised value of real estate and equipment being financed, is $250,000.00 or less, there is not a close relationship between the buyer and seller, and lender's internal policies and procedures do not require a valuation from a qualified source,  a lender may complete its own business valuation. 

 

Who can perform a business valuation?

In those instances in which the SBA requires an outside appraiser, lenders must use a "qualified source," which is an individual who regularly receives compensation for performing business valuations and is either:

  • A licensed Certified Public Accountant who performs the valuation in accordance with the "Statement on Standards for Valuation Services" published by the American Institute of Certified Public Accountants; or
  • An appraiser accredited by (1) the American Society of Appraisers, (2) the Institute of Business Appraisers, (3) the American Institute of Certified Public Accountants, (4) the National Association of Certified Valuation Analysts, or (5) the National Association of Certified Valuation Analysts

 

What information must be included in the business valuation?

  • The appraiser's opinion of value;
  • The qualifications of the appraiser; and
  • The appraiser's signature certifying to the information set forth in the business valuation

 

What other SBA requirements regarding business valuations should lenders be aware of?

  • The business valuation must be requested by and prepared for the lender, not the borrower. 
  • Lenders must obtain a copy of the financial information on which the valuation was based and verify the information against seller's tax transcripts. 
  • Whereas the SBA allows lenders, under certain circumstances, to finance real estate purchases when the real estate appraisal is within 10% of the estimated value and purchase price, the SBA does not give lenders the same flexibility with business valuations.  Any amount in excess of the business valuation may not be financed with an SBA loan. 

 

To avoid a repair or denial of the SBA guaranty, it is important for lenders to adhere to the SBA's requirements regarding business valuations when financing a change of ownership.  For more information on business valuations and other SBA documentation and closing issues, contact Katie at [email protected] or 215.542.7070. 

 

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knowDid you know...

 Compass

...that Starfield & Smith, P.C. helps lenders nationwide preserve and protect the SBA guaranty?  From eligibility issues, to documentation and closing, to servicing and liquidation, we assist lenders that place a premium on protecting the guaranty.

 

For more information about this and other services Starfield & Smith, P.C. provides its clients, please call Ethan at 215-542-7070 or by email at [email protected].
  
SeminarSeminars and Events
  
SBA Loan Guarantees:
Current Purchase Issues and Complexities

Presented by: Lorman
Date: December 8th, 2010
Time: 1:00 pm - 2:30 pm EST
Location: Webinar
 

In the current economy, many lenders are looking to the credit enhancement offered by the U.S. Small Business Administration's government guaranteed lending programs to keep capital flowing to America's small businesses. While the many benefits of the programs may be appealing to lenders an understanding of the guaranty purchase process and the pitfalls which lenders fall victim to, resulting in discounts and denials of these same loan guarantees, is more important now than ever. As the oversight standards of the SBA tighten, you need the knowledge to ensure their loan guarantees will be honored by the SBA.


To see a brochure for this event, click here

Register online here.
Or call 1-866-352-9539
When registering, use priority code 15800 and discount code F2716129.


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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

http://www.starfieldsmith.com
 
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