 |
|
| |
Janet is a Partner in the firm's Fort Washington office. Her practice's primary focus is on commercial lending, business law, and real estate. Representing bank and non-bank lenders in hundreds of commercial lending transactions nationwide, she has extensive experience as closing counsel for various financial transactions, many of which involve government assisted programs and multi-jurisdictional issues and collateral. In such role, she uses her knowledge of finance and a proactive approach to assist the lenders with eligibility determinations, due diligence collection, preparation and negotiation of loan documents, and closing of the loan transactions.
Janet is an approved closing attorney for certified development companies which facilitate U.S. Small Business Administration loan programs. In such representation, she assists borrowers and third party lenders in understanding all the complexities in the requirements and funding process under the SBA 504 loan program. She also works closely with local SBA District Counsel to insure the eligibility of the loan submissions for inclusion in the applicable monthly debenture fundings.
ADMISSIONS:
- Pennsylvania
- New Jersey
- Maryland
To read more about Janet, click here.
| |
|
|
Find us on Facebook!
Become our fan on Facebook to receive updates, articles and news pertaining to SBA and lending related topics.
|
|
Starfield & Smith is on LinkedIn!
Link yourself to Starfield & Smith to receive updates, articles and news pertaining to SBA and lending related topics.
|
|
Starfield & Smith, PC is on Twitter!
Follow us for links to our most recent news and articles.
|
|
|
FEATURED ARTICLE 
Best Practices: When Between a Rock and a Hard Place, Facts Matter!
By: Ethan W. Smith, Esquire
 |
| | Ethan W. Smith, Esquire |
Most SBA lenders are aware of the rule that they cannot request that the SBA purchase a loan guaranty until the loan has become at least 60 days past due. 13 CFR §120.520. However, a difficult question can arise for lenders when a borrower has defaulted under the note, but continues to stay current on payments. Can the lender enforce its rights under the note, or must it wait until the borrower misses 2 payments before it can take action? A close reading of SOP 50 57 2 can provide some helpful guidance on this point.
The SOP provides that SBA "Lenders with a non-SBA guaranteed loan portfolio may decide whether to accelerate the Note based on their own policies and procedures for similarly-sized non-SBA guaranteed commercial loans." SOP 50 57 2, Chapter 14, Paragraph B.1. This would lead most lenders to conclude that they can accelerate for any default which would allow acceleration of a similarly sized conventional loan. However, lenders should be careful not to act too hastily, as the SBA provides additional clarification in a note to this section which provides: "A Lender may not request guaranty purchase based solely on a non-payment default such as failure to provide financial statements in a timely manner." Id.
So, what is a lender to do? It may seem that lenders are between the proverbial rock and a hard place; on the one hand, being allowed to accelerate a note according to their conventional loan policies and procedures, but on the other hand, being admonished not to push borrowers into liquidation for purely "technical" reasons. For lenders looking for options, an examination of the relevant facts is in order.
SBA is clear that lenders should not accelerate for purely technical reasons (i.e. failure to provide financial statements, tripping a financial performance or other reporting covenant, or other non-material, non-payment defaults). Acceleration of a note on these grounds is contrary to the SBA's stated goal of "helping entrepreneurs start, build and grow viable small businesses." SOP 50 57 2, Chapter 1, Paragraph C. However, there may be some defaults that, while "technical" in nature, may be of such importance so as to warrant a lender's acceleration of the note and pursuing its remedies, notwithstanding the fact that no payments have been missed. Such defaults may include material non-payment defaults such as: conversion or other unauthorized disposal of SBA loan collateral; borrower engaging in a pattern of fraudulent conduct designed to obstruct or mislead the lender; borrower's fraudulent misuse of loan proceeds, or other fraudulent actions of the borrower (all of which would also warrant a referral to the OIG). These types of defaults speak to a competing interest of the SBA: "maintaining the integrity of the loan program..." Id.
In such cases, Lenders may be justified in accelerating their notes, thereby causing the loan to become 60 days past due if not paid within that time frame and entitling the lender to request a purchase of the guaranty. In such situations, it is imperative that lenders thoroughly document their files regarding the reason for the acceleration and how acceleration of the note protects the interests of both the lender and the SBA, as well as the integrity of the SBA loan program.
Accordingly, SBA lenders confronted with serious non-payment defaults are not necessarily without recourse. By examining the facts of each case to determine the seriousness of the non-payment defaults, Lenders may be able to justify acceleration of the note and liquidation of the collateral in certain circumstances. Lenders that pursue this option must clearly document their files to ensure that the SBA will clearly see the Lender's reasoning and why acceleration was necessary to protect the interests of the SBA.
|
SEMINARS & EVENTS
NAGGL 2016 SBA Lending Technical Conference
Date: May 2, 2016 through May 4, 2016
Location: Hyatt Regency St. Louis at the Arch, St. Louis, MO.
Closing and Funding the SBA Loan
Date: May 5, 2016 & May 6, 2016 Instructor: Ethan W. Smith
How to Get SBA to Honor Its Guaranty
Date: May 6, 2016 Instructor: David W. Starfield
For more information about this event, and/or to register, click here.
Avoiding Lender Liability
Presented By: SBA West Virginia District Office Instructor: Ethan W. Smith Date: May 17, 2016 at 11:00am EST Location: Webinar
For more information about this event, and/or to register, click here.
WPASGL 2016 Quality Circle Presented By: Western Pennsylvania Association for SBA Guaranteed Lending (WPASGL) Instructor: Kimberly A. Rayer Date: May 22, 2016 through May 23, 2016 Location: Nemacolin Woodlands
For more information about this event, and/or to register, click here. | |
|
WHAT OUR CLIENTS SAY...
Fredda K. Morgan / SBA Administrator / Green Bank
I have known and worked with David Starfield and Ethan Smith since the mid 90's. The SBA market has seen many changes over the years and in every aspect of my association with them, from processing to liquidation, they and their firm have proven to be experienced, knowledgeable and professional. I wouldn't be where I am today without them showing me the way. I refer anyone to them that is in need of their services.
|
|
|
|
|
