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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. 
Jessica has counseled business entities with regard to entity formation, capitalization, employment contracts and other general business matters, including the preparation and successful defense of an application by a nonprofit to IRS for 501(c)(3) exempt status.
ADMISSIONS:
  • Pennsylvania
  • New Jersey
  • New York
 
To read more about Jessica, click here
  

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FEATURED ARTICLE FeatureArticle

Best Practices: SBA Life Insurance Requirements   
By: Timothy D'Lauro, Esquire 
Timothy D'Lauro, Esquire
When underwriting an SBA loan, a Lender has many different issues to consider.  The Lender must look to the Borrower and decide whether or not lending money to the Borrower is an acceptable risk.  In addition to the real estate, personal property, and other types of collateral the Lender uses to secure the loan, the Lender will also look for other ways to mitigate its risk.  One of the ways Lenders do this is to require the principals of  the business to obtain life insurance.
Under the SOP 50 10 5 (H) at page 185, the SBA lays out the requirements for when life insurance is required, how much, and when life insurance is not necessary.  During the underwriting process, the Lender must first review the Borrowing entity and the ownership structure to determine what is the appropriate requirement to meet SBA loan guidelines, and who, if anyone should be required to obtain life insurance.  For loans under $350,000, Lenders should follow their internal guidelines.  For loans over $350,000, if the owner of the business is crucial to the every day operations of the business and its success, the owner's well-being will also directly affect the Borrower's ability to repay the loan. If this owner dies, and the business is no longer able to function, and in turn does not make payments on its loan, the SBA would most likely view this as a reason to repair or deny the guaranty.  For example, a business with 4 equal partners who are each equally qualified to perform all tasks of the business are more likely to not suffer financially from the death of one of the partners.  To the contrary, a small, single doctor veterinarian practice where only one doctor sees patients and treats the animals is far more likely to collapse financially if that doctor were to die. In the first scenario, the Lender can make a justified decision that it will not require life insurance on the owners because the viability of the business will not be compromised by the death of one owner; that there is an adequate succession of management.  In the second scenario, a Lender will most likely require life insurance on the veterinarian, as the viability of the business is wholly dependent upon the debtor.
The next consideration the Lender needs to make if it decides that life insurance is necessary, is how much life insurance is required.  The amount of the life insurance must be commensurate with the size and term of the loan.  The Lender may also take into account the amount and types of collateral securing the loan.  If the Lender obtains a substantial amount of collateral which it believes can be easily liquidated if necessary, it may require a lesser amount of life insurance be obtained.  For example, if the Lender is providing a $1 million dollar loan, and it is secured by real estate with liquidation value of around $500,000.00, the Lender may not require the Borrower to obtain life insurance for the full loan amount, but more likely an amount that would bridge the gap of the monetary difference between the collateral value and loan amount.
There are also scenarios that the Lender may encounter whereby the owner or principal is deemed uninsurable.  Whether the health of the owner or other factors make obtaining life insurance not feasible, the Lender must also document this process.  If the Lender determines that obtaining life insurance is not possible, it must obtain written documentation from a licensed life insurance provider stating the same.
If the Lender decides life insurance is required, the Borrower must then obtain a collateral assignment, naming the Lender as Assignee, and acknowledged by the Insurer's Home Office.  The Lender must also keep in mind that it must monitor the loan that insurance premiums are being paid and kept current. In the event that the Lender receives a cancellation notice, it must evaluate whether or not it should bring the premiums current.
SBA Lenders should be mindful of SBA's requirements for life insurance.  In the event a loan defaults because of the death of an owner, failure to follow the SBA guidelines can result in a denial of the SBA guaranty.
For more information regarding SBA life insurance, please contact Tim at [email protected] or at 267-470-1182.

SeminarsSEMINARS & EVENTS 


NAGGL Annual Conference
 

Presented By: NAGGL
Date: November 2, 2015 - November 6, 2015
Location: The Cosmopolitan of Las Vegas
 

** SOLD OUT **
 
How to get SBA to Honor Its Guaranty
 

Presented By: NAGGL
Instructor: Ethan W. Smith
Date: November 5, 2015
Location: The Cosmopolitan of Las Vegas
 

For more information about this event and/or to register, click here.
 
Advanced SBA Loan Closing & Documentation
 

Presented By: NAGGL
Instructor: David W. Starfield
Date: November 5, 2015 - November 6, 2015
Location: The Cosmopolitan of Las Vegas
 

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

 

Closing and Funding the SBA Loan

 

How to Get SBA to Honor Its Guaranty

 

Presented By:  NAGGL

Instructor:  David W. Starfield

Date:  November 16 - 20, 2015

Location:  Stuart (West Palm Beach), FL

 

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

 

TestimonialsWHAT OUR CLIENTS SAY... 

David Lucht / Chief Risk Officer / Live Oak Bank
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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