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IN THE SPOTLIGHT
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Ethan W. Smith is a partner in the law firm of Starfield & Smith, P.C., where his areas of practice focus on government guaranteed lending, commercial lending, banking, real estate and commercial law. Ethan has closed thousands of government guaranteed loans on behalf of his lender clients, assists lenders nationwide with SBA guaranty purchase issues and has been retained as an expert witness on SBA related litigation matters. Ethan is a licensed title insurance agent for Chicago Title and Fidelity National Title in both Pennsylvania and New Jersey. He is a member of the National Association of Government Guaranteed Lenders (NAGGL) and is a frequent speaker and serves as a member of its Associate Member Committee. Ethan is also an affiliate member of the National Association of Development Companies (NADCO), is a member of its Attorney Advisory Council and is qualified as a designated closing attorney for the SBA 504 Program. During the years 2005-2011, Ethan was honored by being named a Pennsylvania "Rising Star" by Philadelphia Magazine and is rated by Martindale Hubbell as an "AV Preeminent" attorney. He earned his B.A. degree from Johns Hopkins University, Baltimore, Maryland and J.D. degree from the College of William and Mary School of Law.
ADMISSIONS:
- Pennsylvania
- New York
- Federal District Court for the Middle District of Pennsylvania
To read more about Ethan, click here.
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FEATURED ARTICLE 
Best Practices: Help! What Searches Should I Order?
By: Katie O'Brien, Esquire
The Small Business Administration ("SBA") sets forth many regulations which lenders are required to follow, but the SBA does not give lenders much guidance when it comes to performing due diligence on its borrowers. Instead, the SBA expects lenders to use a prudent lending standard to guide their practices. An important part of a lender's due diligence is ordering searches on borrowers, guarantors and sellers to make sure the collateral securing the loan is not encumbered (or is encumbered only by those liens the lender was expecting) and that there are no liens filed against the parties to the transaction. Lenders can protect themselves and their borrowers and cut down on unnecessary costs by understanding which searches are required depending on the type of transaction and the specifics of the deal. Below is an explanation of some of the more common searches that lenders may want to consider ordering.
Certificate of Good Standing
- Certificate from a Secretary of State which shows that an entity is active and/or in good standing to transact business in the state where the entity is formed or the state where the entity is doing business
- Order on borrowers, guarantors and sellers if these parties are registered entities such as corporations, limited liability companies or limited partnerships; order in the state where the entity is formed and the state where entity is doing business, if different
Corporate Tax Lien Certificate
- Varies by state, but typically shows whether an entity has paid its corporate taxes to the taxing authority in the state where the entity is doing business
- Consider ordering on entities which are buying, selling or pledging collateral as unpaid taxes may result in a senior lien in favor of the state on the assets securing the loan; order in the state where the entity pays taxes
Uniform Commercial Code ("UCC") Search
- Shows whether or not personal property being pledged as collateral has already been pledged to another creditor
- State UCC searches - order on individuals or entities that are buying, selling, or pledging personal property as collateral; order in state where entity is organized/incorporated or where the individual is a resident
- County UCC searches - order on individuals or entities that are buying, selling, or pledging personal property which is affixed to the real estate (i.e. fixtures); order in county where the fixtures are located
Tax Lien and Judgment Search
- Shows all tax liens or judgments which have been filed against an entity or individual
- Consider ordering on borrowers, sellers and guarantors (if the guarantor's income is a source of repayment for the loan); order in the state and county where the business is operating or where the individual resides
Bankruptcy
- Consider ordering bankruptcy searches on borrowers, sellers and guarantors to confirm that no parties in the transaction have filed bankruptcy; order in county where the business is operating or where the individual resides
Pending Litigation Search
- Shows pending lawsuits which have been filed against an entity or individual, but have not yet resulted in a judgment or dismissal
- If borrower is purchasing the stock of a business, a lender should consider ordering a pending litigation search on the company being purchased to ensure that the borrower does not assume any lawsuits as part of the sale; order in county where the business is operating
Owner and Encumbrance Search (i.e. Property Search or Title Search)
- If a loan is secured by real property, but there is not enough equity in the property to warrant the cost of title insurance, lender should obtain a search of the county records to confirm the title holders and lien holders of record
There is no one size fits all search order, but Lenders can protect themselves and their borrowers and save borrowers money by understanding which searches are necessary depending on the specifics of the deal. For more information regarding searches and closing and documenting loans, contact Katie at (267) 467-1207 or at kobrien@starfieldsmith.com.
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SEMINARS & EVENTS
10 Pitfalls in Determining 7(a) Eligibility
Presented By: SBA West Virginia District Office Instructor: Ethan W. Smith Date: February 9, 2016 @ 11:00am EST Location: Webinar
For more information about this event and/or to register, click here.
SBA Lenders Leadership Summit
Presented By: NAGGL Date: February 16, 2016 - February 17, 2016 Location: Hyatt Regency Orlando, FL
For more information about this event and/or to register, click here.
2016 Southeastern Small Business Lenders Conference
Presented By: Georgia Lenders Quality Circle Date: March 6, 2016 - March 8, 2016 Location: West Hilton Head Island, SC
For more information about this event and/or to register, click here. |
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WHAT OUR CLIENTS SAY...
Scott Stevens / Business Development Officer / Wells Fargo SBA Lending
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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