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In the Spotlight
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David is the co-founder and Managing Partner of Starfield & Smith, P.C. David has been actively involved in SBA lending and has been helping lenders to document, close, service and liquidate SBA loans for over 20 years. In his practice, David represents and assists numerous small businesses and hundreds of lenders that participate in SBA's lending programs, including the National Association of Government Guaranteed Lenders ("NAGGL"). David's skill as an attorney is of the highest caliber. Martindale-Hubbell gives David its highest rating of "AV" for his legal skill and ethics. His peers have repeatedly voted him a "Super Lawyer" in Philadelphia magazine. David uses these skills on a daily basis to represent the interests of small businesses and the lenders that extend capital to the small business community.
ADMISSIONS:
- U.S. Supreme Court
- Pennsylvania
- New Jersey
To read more about David, click here.
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| FEATURED ARTICLE
Best Practices: SBA's Franchise "Magic Words"
By: Greg T. Kupniewski, Esquire
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| | Greg T. Kupniewski, Esquire |
The SBA is in the process of reevaluating its rules on franchises and affiliation. The task at hand is daunting. The new rules need to be clear and comprehensive, yet remain malleable enough to address a wide array of industries and their ever-evolving business models.
The current rules reflect the need for that balance. The rules contain certain very specific requirements and provide guidance on the nuances of particular industries. But the main thrust of the current rules is conceptual in nature, which opens them to varied interpretation. Lenders should proceed cautiously in any regulatory space that is subject to varied interpretation. But sometimes it's the clear and concrete rules that can trip up a lender.
For example, the SBA affiliation rule is very specific regarding the sale or transfer of the franchised business (or its assets) by the franchisee. Such transfers typically are subject to the prior, written consent of the franchisor. The current rule requires that such consent "shall not be unreasonably withheld or delayed." Although it may seem quite simple to require these "magic words" in the franchise agreement, the issue can get murkier in practice.
This type of transfer provision in a franchise agreement very frequently is followed by a list of conditions that must be met before the franchisor will consent to a transfer. Those conditions ordinarily appeal to logic and common sense: requiring the current franchisee to be in compliance with the franchise agreement, requiring the current franchisee to also be current on its payment obligations to the franchisor, requiring the proposed transferee meet all of franchisor's criteria for a new franchisees, and requiring the proposed transferee to enter into a new franchise agreement with franchisor.
In other words, the conditions placed on a transfer typically are non-controversial and facially reasonable. Lenders, however, should resist the urge to replace SBA's required "magic words" with their own judgment on the reasonableness of the stated conditions to the transfer. Lenders should not succumb to push-back from a franchisor who refuses to amend its agreement to state that it will proceed reasonably when the stated conditions of its approval are non-controversial and reasonable on their face. No matter how reasonable the franchisor's conditions to transfer may appear, the franchise agreement must specifically state that the consent to transfer "shall not be unreasonably withheld or delayed." Unless the franchise agreement contains those "magic words," the agreement will ultimately be deemed ineligible.
The SBA's revised rules on franchise affiliation may change this requirement. For now, it remains the law of the land. Unless and until the rule changes, lenders may need to take an unreasonably strong position (in the face of very reasonable opposition) to ensure the phrase "shall not be unreasonably withheld or delayed" is included in a borrower's franchise agreement.
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EVENTS & SEMINARS 
Closing & Funding the SBA Loan
Presented By: NAGGL
Instructor: Ethan W. Smith
Date: September 14-15, 2015
Location: Indianapolis, IN
For more information about this event and/or to register, click here.
2015 FLAGGL Conference
Presented By: Florida Association of Government Guaranteed Lenders
Date: September 16, 2015 - September 18, 2015
Location: Gaylord Palms Resort, Orlando, Florida
For more information about this event and/or to register, click here.
Date: November 2, 2015 - November 6, 2015
How to get SBA to Honor Its Guaranty
Instructor: Ethan W. Smith
Date: November 5, 2015
For more information about this event and/or to register, click here.
Advanced SBA Loan Closing & Documentation
Instructor: David W. Starfield
Date: November 5, 2015 & November 6, 2015
For more information about this event and/or to register, click here.
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Scott Stevens / Business Development Officer / Wells Fargo
I've partnered with Starfield & Smith for the past five years, closing SBA loans at Wells Fargo. The attorneys at Starfield & Smith bring a ton of expertise and perspective to each transaction they are a part of. They are approachable and collaborative - qualities that are a necessity in (successfully) closing SBA loans. I would recommend Starfield & Smith to any lender or borrower seeking counsel on these types of highly sensitive, fast-paced settlements. Time and time again, this firm has proven itself to be a key reason for well-organized closings.
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NAGGL BOARD OF DIRECTORS
VOTING HAS BEGUN
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| | David W. Starfield, Esquire |
DAVID W. STARFIELD is running for re-election to the Associate seat on the NAGGL Board of Directors and would greatly appreciate your support. His unique experience and clear contributions to NAGGL make him a strong candidate to fill this seat.
- As a NAGGL Board member, David made frequent visits to DC/Herndon advocating enhancements to SBA loan programs.
- NAGGL "Distinguished Service Award" (2012)
- SBA Financial Services Champion (Eastern PA 2009)
- NAGGL "Instructor of the Year" (past recipient)
- Technical Issues Committee (advisor)
- District III Liaison Committee (current member)
- Convention and Education Committee (past member)
- Developer, presenter and writer of numerous courses/seminars/webcasts/articles/roundtables/ breakout sessions on subjects running the gamut, from eligibility through documentation, closing, servicing, liquidation and guarantee purchase.
David would like to represent you in the battle to invigorate SBA loan programs and make them a key factor in our nation's recovery from the recession. He hopes that you will support his efforts with your vote and, in return, he will represent you to the best of his abilities.
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