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IN THE SPOTLIGHT
 | | Jeffrey S. Feldman, Esq. |
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Jeff concentrates his practice on the litigation, arbitration and trial of commercial disputes in the state and federal courts. Over the course of his more than 15 years of litigation experience, he has represented organizational and individual clients in lawsuits involving a broad range of substantive areas, including: contract law, the Uniform Commercial Code, the transfer and enforcement of judgments, creditors' rights matters, partnership law, disputes among shareholders in closely held companies, disputes among members of limited liability companies, injunction proceedings, covenants not to compete, breach of fiduciary duty claims, business tort claims, unfair competition claims, civil fraud claims, class actions, civil conspiracy and RICO claims, commercial disparagement and defamation claims, abuse of process claims and vicarious liability claims. Jeff offers clients a wealth of knowledge regarding commercial litigation, creditors' rights matters, federal and state subpoena compliance (including the discovery of electronically stored information), equipment financing and leasing. He also reviews and prepares SBA loan guaranty purchase packages, liquidates SBA loans in Pennsylvania and New Jersey, participates in compliance audits for SBA lenders, and advises SBA lenders on documentation, closing and compliance issues. ADMISSIONS: * Pennsylvania * New Jersey * U.S. District Court for the Eastern District of Pennsylvania * U.S. District Court for the District of New Jersey * U.S. Court of Appeals for the Third Circuit
To read more about Jeff, click here.
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FEATURED ARTICLE
Best Practices: Franchise Reviews under the
SOP 50 10 5(F)
By: Timothy D'Lauro, Esquire
 | | Timothy D'Lauro, Esquire |
One of the notable changes under the new SOP 50 10 5 (F), becoming effective January 1, 2014, concerns Franchise reviews and determinations for PLP lenders. This new change appears to be a great addition for PLP Lenders, and SBA Borrowers. The rule change should help streamline loans for franchises and make available valuable resources that would otherwise be needed to properly process the loan.
Under the SOP 50 10 5 (F) at page 79, the revised language states that for a loan being processed under delegated authority, the Lender must conduct the review and determination of the Franchise Agreements and documentation, but that "delegated lenders also have the option of submitting franchise agreement documentation to SBA for an affiliation determination." If the SBA determines that the parties are not affiliated, the Lender can continue to process the loan under its delegated authority.
This new language benefits all parties involved. The Lender, under its delegated authority, can underwrite and process the loan as it determines is prudent, without having to take the risk of getting an affiliation determination wrong. Additionally, the Lender can rely on the decision of the SBA in determining the affiliation between the Franchisor and Franchisee without having to worry about the possibility of being second guessed on this point by the SBA, and possibly risking its guarantee on this basis. However, Lenders should be cautioned that the SBA's review only goes to whether or not the Franchisor and Franchisee are affiliates. The SBA's determination is not an eligibility determination and there may be other clauses or factors, aside from affiliation, that render the franchise or the borrower ineligible for SBA financing. Nevertheless, the SBA's willingness to take on the affiliation analysis should provide more certainty to PLP Lenders on a go-forward basis.
The SBA benefits by incentivizing Lenders to process more loans PLP. By reviewing the Franchise documents early in the process to determine if there are affiliation issues with the Franchise, the SBA can free-up additional resources that would be dedicated to overseeing a loan process that could otherwise be processed under delegated authority.
The final party that benefits from this rule change is the borrower. Often, approval or review of a complete loan application, including time to resolve screen-outs, by the SBA can delay the loan process and create a bottleneck in the closing timeline, frustrating borrowers. If the SBA is only responsible for the Franchise review portion, and the PLP Lender can make its own underwriting determinations, the new rule should enhance the efficiency of PLP Lenders processing franchise loans and help the Borrower get to closing faster.
The SBA continues to try to streamline its processes and make them more efficient. This change, should create a more efficient process, and benefit all parties involved.
For more information regarding franchise reviews under the new SOP 50 10 5(F), please contact Tim at 215.542.7070 or tdlauro@starfieldsmith.com.
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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...
David Lucht / Chief Risk Officer / Live Oak Banking Company
Starfield & Smith is our go-to law firm for issues regarding SBA Repurchases or Compliance. Their knowledge of the SBA, in terms of the people, processes, and policies is unparalleled. The more complex the issue, the more this firm shows their value. We use them both on the closing side, as well as for helping us on Ten-Tab matters. Our main point of contact at the firm, Ethan Smith, in particular is just an exceptionally bright attorney. I whole-heartedly endorse them for any work that involves the SBA programs. They are simply recognized as the expert in that area of law.
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