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In the Spotlight!
 | | David W. Starfield, Esq. |
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David Starfield, the Managing Partner of Starfield & Smith, P.C. a law firm in Suburban Philadelphia, Pennsylvania, has been 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. Among others, David represents several business corporations, lending institutions and certified development companies.
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 Technical Issues and District III Liaison Committees.
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. | |
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Best Practices: SBA expands the definition of "Rentable Property"
By: Kristen G. Dickey, Esq.
 | | Kristen G. Dickey, Esquire |
In May, we published an article on the general Small Business Administration ("SBA") requirement that loan proceeds must be used to benefit an active small business. In that article, my colleague, Timothy DeLauro, set forth the requirements the SBA has created to ensure that loan proceeds are not used to benefit businesses that are passive in nature. One of those requirements concerns the occupancy of Rentable Property by the small business.
Occupancy requirements are driven by the use of proceeds and arise when proceeds are used for the purchase of an existing building, the renovation of an existing building, or the construction of a new building. In these situations, the SBA requires certain occupancy standards to be placed in the Loan Authorization ("Authorization") and the Lender must perform adequate due diligence to ensure the Borrower complies with these requirements. The Lender's failure to include these requirements in the Authorization and to ensure the Borrower complies with them could impact the Lender's SBA Guaranty.
In SOP 50 10 5(E), Subpart B, Chapter 2, Paragraphs IV.F.2. and 3. (Pages 138-139) and Subpart C, Chapter 2, Paragraphs III.H.6.b(2) and (3) (Pages 313-314), "Rentable Property" was defined by the SBA as "the total square footage of all buildings or facilities used for business operations (13 CFR 120.10) excluding vertical penetrations (stairways, elevators, and mechanical areas that are designed to transfer people or services vertically between floors), and including common areas (lobbies, passageways, vestibules, and bathrooms). Rentable property excludes all outside areas.
However, after a review of recent examples, the SBA has revised the definition of "Rentable Property" by expanding the areas of a business property that may be included in calculating the total square footage of "Rentable Property." The SBA concluded that certain exterior space may be actively used in the operation of certain types of businesses and should be included in the calculation of "Rentable Property." Pursuant to Policy Notice 5000-1252, effective October 1, 2012, the definition of "Rentable Property" is "the total square footage of all buildings or facilities used for business operations (13 CFR 120.10) excluding vertical penetrations (stairways, elevators, and mechanical areas that are designed to transfer people or services vertically between floors), and including common areas (lobbies, passageways, vestibules, and bathrooms). Rentable property may also include exterior space (except parking areas) that is actively used in Borrower's business operations."
The SBA provides certain examples of exterior space that are actively used in Borrower's business operations (e.g. outdoor storage yards for general contractors; trucking companies; moving companies; storage companies; and boat slips or docks for marinas) but explains further that the "Lender/CDC must document in its loan file the basis for determining that the exterior space is actively used in Borrower's business operations."
Because the SBA's occupancy requirements are a method by which the SBA insures that loan proceeds are not used to benefit an ineligible passive business, the Lender/CDC must properly document whether any exterior space is actively used in a Borrower's business operations, and precisely calculate the amount of Rentable Property in order to preserve the SBA guaranty.
For more information regarding on occupancy requirements in the SBA 7(a) program, please contact Kristen at (407) 667-8811 or at KDickey@StarfieldSmith.com.
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Seminars and Events | |
WPASGL Fall Training & Golf Outing
*** This Week ***
Presented By: W.P.A.S.G.L.
Instructor: Ethan W. Smith
Date: Friday, October 5, 2012
Location: Pittsburgh National Golf Club, 287 Monier Road, Gibsonia, PA 15044
For more information about this event and/or to register, click here.
NAGGL Rocks! Annual Conference
Presented By: NAGGL
Dates: October 23 - 25, 2012
Location: Red Rock Resort, 11011 West Charleston Boulevard
Las Vegas, Nevada 89135
Instructor: David W. Starfield
Topic: Equity A-Z
Topic: Franchise Agreement Review 101
Instructor: Ethan W. Smith
Topic: "Case Studies: Avoiding Errors that Endanger your Guarantee"
*** This Conference is SOLD OUT! Record attendance has caused the NAGGL Annual Conference to sell out! ***
NAGGL has started a waiting list to attend the conference. If you want to be included on that list, please email them at csisco@naggl.org.
2nd Annual Fresno SBA Loan Servicing Workshop
Presented By: Coleman Publishing
Instructor: Ethan W. Smith
Date: November 14, 2012 - November 15, 2012
Location: The Downtown Club, 2120 Kern Street, Fresno, California, 93721
For more information about this event and/or to register, click here.
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Did You Know...
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...that Starfield & Smith, PC can provide title insurance in Pennsylvania and New Jersey and can place title insurance nationally through its underwriting networks?
For more information about this and other services Starfield & Smith, P.C. provides its clients, please contact Ethan Smith at (215) 542-7070 or at ESmith@StarfieldSmith.com.
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Starfield & Smith, P.C.
Pennsylvania Offices:
1300 Virginia Drive | Suite 325
Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723
2000 Market Street | Suite 500
Philadelphia, PA 19103
phone: (215) 542-7070 | fax: (215) 542-0723
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Florida Office
1101 North Lake Destiny Road| Suite 105
Maitland, FL 32751
phone: (407) 667-8811 | fax: (407) 667-0020
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California Office
2955 Main Street, Second Floor
Irvine, CA 92614
phone: (949) 333-4108| fax: (949) 679-1709
Loan Documentation | Closing | SBA Guaranty Purchase
Franchise Consultation | Regulatory Compliance
Business Consulting | Commercial Litigation
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