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IN THE SPOTLIGHT
 | | Greg T. Kupniewski, Esquire |
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Greg focuses his national practice on representing financial institutions in business restructuring, bankruptcy and financial services matters and other creditors' rights issues. He has extensive experience in all facets of bankruptcy litigation and transactions, including asset purchases and other types of acquisitions. Greg also develops risk management strategies to mitigate his client's losses when their customers enter bankruptcy.
Greg has particular expertise in litigation, bankruptcy and other liquidation activities surrounding government guaranteed loans. Greg's primary focus is maximizing his client's recovery on the government guaranty and developing liquidation strategies that are regulator-approved, effective and reimbursable. Beyond litigation and liquidation, Greg has significant experience successfully preparing SBA guaranty purchase packages and satisfying requests for information from the SBA.
ADMISSIONS:
* Supreme Court of Pennsylvania
* Supreme Court of New Jersey
* United States District Courts for the Eastern and Middle Districts of Pennsylvania
* United States District Court for the District of New Jersey.
To read more about Greg, click here.
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WHAT OUR CLIENTS SAY
Stuart Forsyth / Market President & Chief Lending Officer / HomeBanc, N.A. We rely upon Starfield & Smith as our compliance counsel for our SBA lending business, and we have been very pleased with the level of service that the firm provides to us. Starfield & Smith's attorneys are very knowledgeable regarding all aspects of the life span of an SBA loan, from origination to servicing to liquidation and guarantee proceedings, and they consistently provide us with prompt, responsive, and practical advice. We have found Starfield & Smith to be a particularly valuable advisor and counselor in instances where it has become necessary for our bank to request that the SBA honor its guaranty. We would strongly recommend the attorneys at Starfield & Smith to other SBA lenders that are seeking guidance on SBA compliance issues. |
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FEATURED ARTICLE
Best Practices: Avoiding Businesses with an Associate of Poor Character under the new
SOP 50 10 (5)(F)
By: Kimberly A. Rayer, Esquire
 | | Kimberly A. Rayer, Esquire |
A crucial step in determining whether a Borrower is eligible for SBA financing is to identify every owner, general partner, officer, director, managing member, owner of 20% or more of the equity of the Borrower, Trustor, and any person who is the day to day manager of the business operations of a Borrower (collectively, the "Subject Individual") and determine whether such Subject Individuals are of good character. The revised SOP 50 10 (5)(F) taking effect on January 1, 2014 ("New SOP"), retains many of the prior requirements for vetting Subject Individuals, but provides new guidance which allows delegated lenders and SBA Field Officers to clear certain "912 Issues" that may arising when vetting Subject Individuals for good character.
Generally, the SBA defines poor character as anyone who is incarcerated, on probation, on parole, who is currently under indictment for a felony or a crime of moral turpitude, or who is presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction. See 13 CFR §120.110 (n).
Once the Subject Individuals are identified, a lender must have each of the Subject Individuals answer questions 1, 2 and 3 on the new SBA Form 1919, Borrower Information Form, as follows:
- Are you presently under indictment, on parole or probation?
- Have you ever been charged with or arrested for any criminal offense other than a minor vehicle violation (including offense which have been dismissed, discharged or nolle prosequi)?
- Have you ever been convicted, placed on pretrial diversion, or placed on any form of probation, including adjudication withheld pending probation for any criminal offense other than a minor vehicle violation?
The Subject Individual must reveal all offenses even if he or she believes their record is sealed, expunged or otherwise unavailable. If the Subject Individual's answers reveal that the Subject Individual is currently under indictment, parole or probation, then the Borrower is not eligible for SBA financing.
However, if the Subject Individual answers "yes" to question 2 or 3, but is not under indictment, parole or probation, then SBA Form 912, Statement of Personal History, must be completed and the lender should obtain a complete understanding of each circumstance that the Subject Individual describes on Form 912. If the Subject Individual discloses a felony arrest, a Fingerprint Check is required and a Fingerprint Card (FD 258) must be completed. If the Subject Individual discloses a past misdemeanor, the background check may either be a Name Check or a Fingerprint Check.
Regardless of whether the past offense was a felony or a misdemeanor, the lender must submit the complete 912 package to the local SBA field office before loan processing can proceed. The field office will send the complete 912 package to the Office of Inspector General/Office of Security Operations (OIG/OSO) at SBA Headquarters. Typically submitting a SBA Form 912 to the OIG/OSO means that the SBA Loan application remains on hold until the "912 Issue" is cleared.
However, under the New SOP, the SBA is giving lenders with delegated authority and SBA Field Officers the power to clear certain 912 Issues if the information disclosed on the SBA Form 912 meets one of the following criteria:
- A single minor (misdemeanor) offense or arrest; OR
- Up to three minor offenses (arrests and/or convictions at one time or separately), concluded more than 10 years prior to the date of the SBA application; OR
- A Prior Offense cleared by the Director, Office of Financial Assistance (D/FA) or designee on a previous application where no other offenses have occurred since the previous application was cleared by the D/FA or designee. This clearance is only valid for six month from date of issuance.
Allowing lenders to have more control over vetting and clearing Subject Individuals of minor offenses is a great step to streamlining the SBA loan process. However, with great power comes great responsibility. It's crucial that lenders fully vet each Subject Individual and be sure that all information is revealed on SBA Form 912. If a lender learns post-disbursement of a discrepancy between what was disclosed on SBA Form 912 and the results of the Name or Fingerprint check conducted by the OIG/OSO, it may find out too late that its Borrower was not eligible for SBA Financing and it may be without an enforceable SBA guaranty.
For more information on the new SBA Form 912 process, please contact Kimberly A. Rayer, Esq. at 215.542.7070 or at krayer@starfieldsmith.com.
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EVENTS & SEMINARS
NAGGL Mid-Year Conference
Date: May 6-8, 2014
Location: Hyatt Regency Coconut Point, Bonita Springs, FL
For more information and/or to sign up, click here.
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