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IN THE SPOTLIGHT
 | | Kimberly A. Rayer, Esq. |
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Kimberly Rayer is a partner in the law firm Starfield & Smith, PC, where she concentrates her practice in the areas of commercial lending, commercial contracts and corporate law. She represents financial institutions nationwide, including national banks, community banks, credit unions and non-bank lenders, in extending commercial credit facilities to small and mid size businesses. Kim has extensive experience in the areas of government guaranteed financing, as well as business and real estate acquisition financing, lines of credit, healthcare financing and other secured and non-secured credit transactions. Kim advises lenders on eligibility, documenting and closing loans under the SBA 7(a) and 504 loan programs.
ADMISSIONS:
* Pennsylvania
* New Jersey
* Federal District Court for the Eastern District of Pennsylvania
HONORS/AWARDS:
* Selected for inclusion in Super Lawyers- Pennsylvania Rising Star in 2010 (Banking, Securities & Corporate Finance, Business/Corporate)
MEMBERSHIPS:
* National Association of Government Guaranteed Lenders
* Pennsylvania Bar Association
* Philadelphia Bar Association
* American Bar Association
To read more about Kim, click here.
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FEATURED ARTICLE
NEW SOP 50 10 5(F) BRINGS BIG CHANGES TO SBA LOAN
PROGRAM REQUIREMENTS
By: Ethan W. Smith, Esquire
 | | Ethan W. Smith, Esquire |
On September 24, 2013, SBA released SOP 50 10 5(F) to the SBA lending community. This SOP will become effective on January 1, 2014 and contains several significant changes to SBA's requirements in connection with its loan programs. Many of the revisions reflect a continuation of SBA's stated goals to streamline, standardize and simplify its loan program requirements and alter many long-standing program requirements. A brief summary of the more significant changes follows:
- All loans under $350,000 will be underwritten and processed utilizing the criteria for Small Loan Advantage ("SLA") loans;
- The application forms (SBA Forms 4 and 4i) will be replaced by SBA Forms 1919 and 1920SX;
- SBA will provide eligibility reviews for franchises not on the franchise registry for PLP lenders;
- PLP lenders will be authorized to clear minor 912 issues;
- The requirement for business valuations for the refinance of change of ownership transactions has been eliminated;
- SBA has clarified its policy on utilizing 7a loans to refinance 504 loans when both the permanent loan and the 504 loan are refinanced;
- For loans over $350,000, SBA requires a debt service coverage of at least 1.15 on both an historical and projected basis;
- SBA has significantly modified its collateral requirements to only require principals to pledge personally owned real estate when a loan is not otherwise fully secured. The requirement for pledge of securities and other non-real estate assets of the principals has been eliminated;
- SBA has made SBA Forms 147 (Note), 148 (Unconditional Guarantee) and 148L (Unconditional Limited Guarantee) optional, giving lenders the option to use these forms or their own forms;
- For determining if a loan is fully secured, SBA will now allow lenders to value equipment at up to 80% of orderly liquidation value and real estate at 85% of appraised value;
- Lenders must obtain life insurance in conformance with their internal policy for similarly-sized non-SBA loans. SBA only requires life insurance for loans to sole proprietors, single member LLC's or other businesses that depend on one owner's active participation. SBA will allow for waivers if the lender documents its file that the individual is uninsurable;
- Financial statements must now be current within 180 days of application instead of 120;
- SBA has articulated a process for utilizing Industrial Development Bonds in connection with 504 projects; and
- Electronic processing through Etran has become mandatory for numerous changes and notices to SBA.
The above list is illustrative, not exhaustive, but demonstrates the magnitude of the changes that are on their way. Given the significance of these revisions, the January 1, 2014 effective date is welcome to participating Lenders that will be trying to digest and implement these amendments in a relatively short time-frame. SBA continues to strive to simplify its lending requirements to make access to capital easier for small businesses.
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EVENTS & SEMINARS
Date: October 9, 2013
Location: Webinar
For more information about this event and/or to register, click here.
"Advanced SBA Loan Documentation & Closing"
Instructor: David W. Starfield
Date: November 4, 2013 & November 5, 2013
For more information about this event and/or to register, click here.
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WHAT OUR CLIENTS SAY...
Brad L. Durham / President / Independent Bank of Texas
I have to tell you that we continue to become bigger fans of the firm every time we use you. While Texas and Pennsylvania are pretty far apart geographically, we now have only one firm when it comes to liquidations and/or collections on our SBA loans, and you guys are definitely the firm!
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