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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: Leasing Part of a Building Acquired with SBA Loan Proceeds
By: Timothy M. D'Lauro, Esquire
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| | Timothy D'Lauro, Esquire |
The SBA imposes occupancy requirements when loan proceeds include the purchase of an existing building or for new construction. These requirements are designed to ensure that the borrowing entity's business is successful and that the loan proceeds benefit the borrower, rather than a third party. Accordingly, lenders must perform an analysis of the percentage of rentable property occupied by the small business concern to ensure compliance.
The regulations governing occupancy may be found in 13 CFR 120.10 and 120.131, and the rules are set forth in SOP 50 10 5(H), Subpart B, Chapter 2, IV. F. The structure of the loan and the use of proceeds determine which occupancy requirements apply.
For an existing building, a small business must occupy 51% of the rentable property and may lease up to 49%. For new construction, the borrower must occupy 60% of the rentable property, may permanently lease up to 20% and temporarily lease an additional 20% with the intention of using some of the additional 20% within 3 years and all of it within 10 years. Moreover, the applicant may not use loan proceeds to improve or renovate any rentable property leased to a third party.
If the loan is structured as an EPC/OC facility, lenders should note that the above requirements apply. In addition, the EPC must always lease 100% of the rentable property to the OC. In turn, the OC may sublease a portion of the space consistent with the rules stated above.
Rentable property is the total square footage of all buildings or facilities used for business operations excluding vertical penetrations (i.e. stairways) and including common areas. Rentable property may also include exterior space (except parking areas) that is actively used in a borrower's business operations, such as outdoor storage yards for general contractors or boat slips and docks for marinas.
When the nature of the business requires a resident owner or manager, loan proceeds may be used for the purchase of an existing building or construction of a new building that includes residential space, provided such residential space does not exceed 49% of the total property. The residential space must be essential for the business. For instance, a facility which requires that someone be on the premises 24/7 would enable the residential property to be considered part of the business.
Because the SBA includes occupancy requirements in certain loans, it is important to distinguish which loans require the Authorization to provide this language, and which specific language is needed. Lenders must perform due diligence and carefully review the factual circumstances in order to comply with the Agency's rules and regulations. By doing so, Lenders will help to ensure that the SBA guaranty is protected.
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SEMINARS & EVENTS
10 Pitfalls in Determining 7a Eligibility
Presented By: SBA Eastern PA District Office
Instructor: Ethan W. Smith
Date: April 21, 2016 @ 9:00am
Location: Webinar OR at the Eastern PA District Office, which ever is most convenient for you.
For more information about this event, and/or to register, click here.
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. | |
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WHAT OUR CLIENTS SAY...
David Lucht / Chief Risk Officer / Live Oak Banking Company
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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