(1)   CHOOSING THE RIGHT COUNSEL IS ALMOST AS IMPORTANT AS NOT CHOOSING THE "WRONG" COUNSEL. As with many professions, the legal profession has become increasingly specialized over the years with attorneys focusing on specific areas of the law. A borrower needs to retain an attorney that is sufficiently experienced in transactional law to protect the borrower's interests and get the deal closed. Selecting the "wrong" counsel (such as an attorney that specializes in litigation or family law) can create issues instead of solving them. Think of it this way: you wouldn't see a dermatologist for a broken leg, and you wouldn't have an oncologist perform triple bypass surgery, likewise, you wouldn't want to have a personal injury specialist represent the borrower in a real estate or business acquisition.

(2)   LENDER'S COUNSEL DOES NOT REPRESENT THE BORROWER. Even though the Borrower customarily pays the Lender's legal fees in connection with a loan transaction, Lender's counsel acts solely for, and on behalf of, the Lender. It is prudent for any individual or business to retain competent counsel to assist, where necessary, in negotiating the business terms of the transaction, handling any snafus that may arise during the due diligence phase of the transaction. Competent Borrower's counsel can ensure that the interests of the borrower are adequately protected by ensuring that customary terms, such as a non-compete, or post closing obligations, are both adequate and enforceable. Additionally, Borrower's counsel can make sure that the borrower forms an appropriate entity to own and/or operate its business and ensure that the documentation is in order and is provided to the lender in a timely manner. Furthermore, an efficient borrower's counsel will ensure that all due diligence documentation is obtained and provided to the lender in the correct form in as timely a manner as possible. Borrowers that do not have the assistance of counsel often struggle to provide the lender with the correct documentation in a timely manner and can delay and complicate the closing process by providing incomplete or inaccurate documentation.

(3)   ASSISTANCE WITH CLOSING. A good Borrower's counsel will ensure that all issues are resolved before closing. This greatly streamlines the closing process and reduces the likelihood that there will be issues arising at closing that could potentially affect the loan guaranty. The goal is that every closing should be a document signing only, and that all material issues have been resolved prior thereto. Such an approach will produce a streamlined and efficient closing process that reduces the likelihood that last minute changes will arise or that the closing will be aborted.

In all cases, selecting an attorney should be a carefully considered decision and Borrowers should analyze the particular attorneys' experience, expertise and service. The proper Borrower's counsel can greatly facilitate closing, but the wrong counsel can make the closing process more difficult and could, in the worst case, impact the SBA guaranty.

For more information regarding the selection of Borrower's counsel, please contact Kim at (215) 542-7070 or at  KKnopf@StarfieldSmith.com.

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