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IN THE SPOTLIGHT
| Katie O'Brien, Esq. |
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Katie concentrates her practice in the areas of commercial lending, real estate and commercial contracts. She represents financial institutions nationwide, including national banks, community banks, credit unions and non-bank lenders, who extend commercial credit facilities to small and mid size businesses. Katie has extensive experience in the areas of government guaranteed lending and acquisition financing and has closed hundreds of commercial finance transactions, from start-up business transactions to complex real estate and business acquisitions.
Katie advises lenders on eligibility matters and documenting and closing loans under the SBA 7(a) and 504 loan programs and assists lenders in preserving and protecting their government guaranty. As a closing attorney, Katie reviews loan files, drafts and negotiates loan documents, advises on due diligence documentation and coordinates the closing and funding of transactions. She also assists lenders with respect to their closed SBA-guaranteed loan files by reviewing and preparing SBA guaranty repurchase packages, responding to SBA recommendations, and performing loan portfolio audits.
ADMISSIONS:
To read more about Katie, click here.
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FEATURED ARTICLE
SBA Issues Final Rule Regarding Personal Resources Test
By: Jennifer Borra, Esquire
| Jennifer Borra, Esquire |
On March 21, 2014 SBA published its Final Rule in the Federal Register applicable to the SBA's 504 loan program and 7(a) loan program. The rule addresses eligibility issues for applicants with significant personal resources, and certain program participant requirements applicable to the 504 loan program. Although SBA initially proposed changes to affiliation principles, SBA decided to further examine how they will define affiliation and did not include any changes to the affiliation standards in this final rule. The rule is effective April 21, 2014, except for the amendment to 13 CFR 120.823, which is effective April 21, 2015. Notable items from the final rule are as follows:
Elimination of Personal Resources Test - 13 CFR 120.102
SBA has eliminated 13 CFR 120.102 which required any owner of 20 percent or more of the equity of the small business applicant to inject his or her personal resources when that owner's liquid assets exceeded the amounts specified in the regulations. In eliminating this eligibility requirement, SBA increased the potential pool of SBA applicants for lenders and potentially the growth of SBA's loan programs.
CDC Operational and Organizational Requirements
13 CFR 120.820 - Affiliation Rules affecting CDCs are consolidated under this Section
13 CFR 120.823 - CDC Board of Directors - significant new rules affecting CDC governance.
This section of the regulations will not go into effect until April 21, 2015, to allow CDC's time to understand and implement the changes SBA requires.
13 CFR 120.882.(a) - The "9-month rule" (applies to 504 loan program only)
SBA will eliminate paragraph (a)(2) of this section to permit financings of expenses toward a Project regardless of when they were incurred, so long as they are directly attributable to the Project. The determination of whether the expense is directly attributable to a Project is a fact specific one, which SBA will determine.
13 CFR 120.920 - Required Participation by Third Party Lender
SBA clarifies that to the extent a Third party Lender obtains additional collateral or other security for the Third Party Loan, aside from a lien on the Project Property, then the Third Party Lender must liquidate or otherwise exhaust all reasonable avenues of collection with respect to the additional collateral no later than the disposition of the Project Property, and the Third Party Lender must apply any proceeds received as a result of the additional collateral to the balance outstanding on the Third Party Loan prior to the application of proceeds from disposition of the Project Property to the Third Party Loan. The rights and obligations of the Third Party Lender with respect to liquidation and foreclosure are still governed by the Third Party Lender Agreement.
For more information regarding this Final Rule, please contact Jen at 267-470-1206 or at [email protected].
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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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