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 Spotlight

In the Spotlight

  

Jessica L. Conn
Jessica L. Conn, Esq.

 

Jessica practices business law with a focus on commercial lending and government guaranteed lending. In that capacity, she represents banks, credit unions and certified development companies in closing and funding loans. Jessica has extensive experience in reviewing due diligence and drafting and negotiating loan documents for the finance of a variety of transactions including construction, asset purchases, stock purchases, refinance, working capital, equipment purchases and real estate purchases. 

 

With respect to government guaranteed lending, Jessica has closed loans under both the SBA 504 loan program and the 7(a) loan program, including CAPline and Export Working Capital loans. Jessica has also worked on financings under the USDA B&I loan program. In addition to closing and funding government guaranteed loans, Jessica also consults with lenders and lender service providers on eligibility issues related to loan structuring.  

 

ADMISSIONS:

  

  • Pennsylvania
  • New Jersey 
  • New York

 

To read more about Jessica, click here

  




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FEATURED ARTICLE 

Best Practices:  Documenting Disbursements on Multi-Disbursement Loans        

 

 

By: Jennifer E. Borra, Esquire  

  

Jennifer Borra
Jennifer Borra, Esquire
Documenting disbursement on a SBA 7a loan can be a monumental task for lenders on multi-disbursement loans.  SBA cites failure to use loan proceeds as required by the loan authorization as one of the most common lender deficiencies noted in PLP audits and guaranty purchase reviews.  SOP 50 10 5(G), Subpart B, Chapter IV, Paragraph C, Section 4 states that 7(a) lenders must have SBA Form 1050 (Settlement Sheet) executed at the time of first disbursement and must provide backup documentation for each and every disbursement of loan proceeds thereafter.  Additionally, the SOP indicates the types of evidence and documentation required to prove compliance with the use of proceeds listed in the Loan Authorization.

Lenders can demonstrate evidence of disbursement in a variety of ways.  Lenders should request copies of each disbursement check and wire confirmation from the closing attorney or escrow officer's account at settlement. Additionally, lenders should collect any corresponding invoices or receipts to show the charges incurred by the borrower that were paid at the time of closing. Lenders must ensure that each disbursement check supports the use of proceeds categories listed in Section G. of the Loan Authorization. If the disbursement amounts do not match the use of proceeds as originally projected, then the lender may need to modify the use of proceeds in accordance with the SOP and 7(a) Servicing and Liquidation Actions Matrix.

Typically, multi-disbursement loans must be fully disbursed within 48 months of approval or any remaining undisbursed balance will be canceled by SBA.  A loan may be considered fully disbursed only when the borrower has access to the loan proceeds and is able to use them in accordance with the SBA loan authorization.  Lenders may utilize an escrow account to assist with making initial disbursements on a multi-disbursement loan, however, such accounts cannot be used for more than 5 business days to facilitate a loan closing.  Any funds remaining the in the escrow account after the 5 day period are not considered disbursed and the lender may not charge interest on the undisbursed funds until they are released to or for the benefit of the borrower.

For multi disbursement loans, each disbursement must be supported by copies of checks, invoices, purchase orders, draw requests or other documentation sufficient to illustrate the proceeds were actually used for the purposes set forth in the Loan Authorization. Under no circumstances should loan proceeds be disbursed directly to the borrower, unless it is for working capital or reimbursement for an authorized use that has been fully documented by the lender.  Notwithstanding the foregoing, lenders may not reimburse expenses incurred by a borrower that is designated as equity injection.

Through careful documentation and review of all disbursements made at closing and post-closing, lenders can confirm compliance with the Loan Authorization's allocated use of proceeds and minimize the risk of any repair or denial of the guaranty arising from insufficient documentation of loan disbursements.

For more information regarding closing and disbursement matters, please contact Jen at [email protected] or at 267-470-1206.
EVENTS & SEMINARS Events

 

Avoiding Lender Liability

Presented By:  SBA
Instructor:  Ethan W. Smith
Date:  April 21, 2015 @ 10:00am EST
Location:  Webinar

For more information about this event and/or to register, click here.

SBA Lending Technical Conference

Presented By:  NAGGL
Date:  May 5 - 7 , 2015
Location:  San Antonio, Texas

For more information about this event and/or to register, click here.

Avoiding Lender Liability

Presented By:  SBA
Instructor:  Ethan W. Smith
Date:  May 12, 2015 @ 10:00am EST
Location:  Webinar

For more information about this event and/or to register, click here.

Exploring the SOP

Presented By:  SBA
Instructor:  Ethan W. Smith
Date:  May 19, 2015 @ 10:00am EST
Location:  Webinar

For more information about this event and/or to register, click here.



Donald Tyson / Senior Vice President / The Bancorp Bank   

 

When The Bancorp Bank made the strategic decision in 2009 to become a national SBA lender, our first call was to Ethan Smith at Starfield & Smith. I had worked with Ethan in deals where he represented the SBA lender and was impressed by the firm's capacity to handle a particularly complicated management buy-out with multiple layers of financing provided by multiple firms. This deal involved a credit line, an SBA term loan, a mezzanine loan, and private equity from multiple investors, not to mention an obstinate seller. The legal side of the deal could not have gone more smoothly. Bancorp's SBA team has been very successful and we have relied on the guidance of Starfield & Smith every step of the way. They work to earn our trust every day and we could not be more pleased with our relationship with them. They have a well earned national reputation for expertise in SBA lending that is unmatched. 

 

                                          
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