SBA SOP 50 10
5(F)
Pre s e nte d to s p o ns o ring
o rg a niz a tio n
Alison W. Rind
Arnold D. Spevack
Lerch, Early & Bre...
Today’s Program





2

Overview
Credit Underwriting
Collateral Requirements
Eligibility
Miscellaneous

© Lerch, Earl...
Overview

3

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
Pur pose of New SOP

 Streamline process
 Facilitate underwriting of small



4

eligible loans to existing lender
pr...
Pur pose of New SOP
(con’t)




5

What was previously referred to as
SLA (≤$350K) has one set of
underwriting criteria;...
Credit Underwriting

6

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
Loans ≤ $350K
→ SOP at p. 161

 Prescreen thru E-Tran If

acceptable, apply thru E-Tran
 If not

Submit for standard pro...
Loans ≤ $350K (con’t)

 Complete IRS verification before


8

submitting thru E-Tran New Form
450T
Score calculated on c...
Minimum Scor e

 Based on lower end of risk profile
of current SBA profile




9

Moving target
Posted on the website
w...
Cr edit Analysis – Demonstr ate
Ability to Repay with Cash
Flow

 Brief history of business
 Length of time under curren...
Credit Anal ysis (con’t)




11

Owner/guarantor analysis –
consistent with similarly-sized nonSBA guaranteed commercia...
Loans >$350K
→ SOP at 163-165

 Demonstrate ability to repay loan
with cash flow

12

© Lerch, Early & Brewer, Chtd. 2013...
Demonstr ating Ability to
Repay





13

Brief history
Length of time in business under
current management
Financial an...
New Definition

 New definition of operating cash
flow - EBITDA

14

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly....
Anal ysis of Cash Flow
Impact

 Unfunded capital expenditures
 Non-recurring income
 Expenses and distributions
 Distr...
Debt Ser vice

 All principal and interest

payments on all SBA debt
inclusive of new SBA loan





16

DSC Ratio (OCF/...
Collateral Requirements

17

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
Major Changes

 What collateral must be taken
 SBA’s appraisal and business


18

valuation standards
Requirements re:...
Until Januar y 1, 2014,
Lender Must





19

Take 1st lien position on assets
financed and
Fully secure all loans base...
W hen 50 10 5(F) Takes
Ef fect → SOP at 168





20

General requirements same as (E)
Must identify collateral and use...
W hen 50 10 5(F) Takes
Ef fect (con’t) → SOP at 168

 If loan proceeds used to


21

purchase assets, lender must
have 1...
Collateral Lender
Must Take
<$25K

 Not required to take collateral

22

© Lerch, Early & Brewer, Chtd. 2013

www.lerchea...
Collateral Lender
Must Take
≥$25K but ≤ $350K → SOP at
168
– Same as non-SBA BUT

 Must obtain lien on applicant’s fixed ...
Collateral Lender
Must Take
>$350K → SOP at 168

 Must collateralize loan to max possible
 If fixed assets do not fully ...
Collateral Lender
Must Take
SBA Express, Patriot
Express, Export Express,
EWPC, International Trade
Loans

 No change in ...
Loan is “Full y-Secured”
→SOP at 169

 If lender has taken security


26

interests in all available fixed
assets with a...
New Language r e
Spousal Guar antees
→SOP at 169


27

“When individual alone or individual and his or
her spouse togethe...
Valuation of M&E
→SOP at 169

New

Used

 75% of net book

 50% of net book





28

value OR
80% with an Orderly
Liqu...
Valuation of Real Estate
→SOP at 169

 85% of value for the calculation

of “fully secured” and the value in
accordance w...
Valuation of Fixed
Assets
→SOP at 169
 If loan will be secured by fixed
assets and valuation of fixed
assets is greater t...
A ppr aisal & Business
Valuation
→SOP at 171
 Loans >$250K secured by real
property – NO CHANGE in
appraisal requirement
...
Feder all y-Re gulated
Lender s






32

Must obtain appraisal by state
licensed or certified appraiser and
follow pri...
Non-FRLs and SBLCs

 Continue to adhere to prior SOP
appraisal requirements

33

© Lerch, Early & Brewer, Chtd. 2013

www...
A ppr aisal & Business
Valuation (con’t)





34

New SOP revises Qualified Source
List to delete a CPA, unless also
hol...
Equity Injection
Requirements →SOP at
161
Loans > $350K
≤$350K
 Begin with pre

35

screening for credit
score
Is equity...
Express, Expor t Express,
Patriot Express Loans →SOP at
165





36

Credit decision left to business
judgment of lende...
Per sonal Guarantees and Guarantor
Collateral →SOP at 168-170

 Owners of ≥20% must provide


37

unlimited personal gua...
Collateral Shor tfall with
Inadequate Business Fixed Assets
→SOP 169

 Required to take equity in


38

personal residen...
Collateral Shor tfall with
Inadequate Business Fixed Assets
(con’t)

 No change in prior requirement



39

that non-own...
Insur ance
Requir ements
→SOP at 187-188

 Hazard insurance required on


40

assets pledged as collateral
Flood insuran...
Life Insur ance
→SOP at 188 and 189

 SLA Loans, SBA Express, Export


41

Express and Patriot Express –
May follow simi...
Life Insur ance on Loans
>$350K







42

May use similar non-SBA policies EXCEPT
If not fully secured, life insuranc...
Eligibility

43

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
Fr anchise Requirement
Changes →SOP at 78

 Language added re


44

determination for affiliation
purposes
Language adde...
Revisions re Ineligible
Businesses →SOP at 89, 92

 Financial advisors →SOP at 89
 Involved in gambling →SOP at


45

9...
912 Clear ance →SOP at 93

 Principals are incarcerated, on


46

probation, on parole or under
indictment
“Deferred pr...
“Yes” Response Can Be
Cleared If





47

Single minor (misdemeanor) offense
or arrest
Up to 3 minor offenses conclude...
Refi of Existing 504 with
7a
→SOP at 117





48

May refinance a 504 loan with a 7a loan
if the transaction meets the ...
Application Process

49

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
A pplication New For ms
→SOP at 197







50

Form 1919 (Borrower’s Info) and
Form 1920 (SX) – IDs eligibility
issues...
E-Tran ≤$350K →SOP at
202

 DUNS # required – Startups


51

must apply for DUNS # for ETran submission
If credit scorin...
E-Tr an >$350K
→SOP at 202

 Forms 4 and 4(I) no longer to

be used
 Collateral list not included in
new forms – must st...
Miscellaneous Changes

53

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
CAPLine – Wor king Capital
Lines Disbur sement →SOP at
217-226

 Borrowing base OR
 1:1 collateral ratio clarification
...
CAPLine – Pr oceeds of
Collections →SOP at 217226

 Must pay down the line
 Consistent with borrower’s
operating cash cy...
CAPLine – Inclusion of
Receivables →SOP at 217226

 Subcontracts that are foreign AR
issued by Export-Import Bank or
majo...
CAPLine – Annual
Review
→SOP at 217-226
 If maturity coincides with
scheduled annual review, lender
may advance on line u...
Financial Statements
→SOP at 198

 Business financials – 180 days
 Personal financials – 90 days

58

© Lerch, Early & B...
Loan Documentation

 Form 1050 no longer required for


59

≤$350K (still document
disbursements)
May use own forms wit...
504 Credit Standar ds
→SOP at 237

 Clarification: Credit reports only
required for
 Small business concern
 Owners
 G...
504 Credit Standar ds
(con’t)

 Documentation required for Third
Party Loan →SOP at 239
 LOI
 Term sheet
 Commitment l...
504 Credit Standar ds
(con’t)

 If Third Party Loan provides

preference in commitment/term
sheet, issuance of Authorizat...
504 Credit Standar ds
(con’t)

 SBA may now participate in

projects financed with obligations
exempt from state and loca...
Speaker s
 Alison Rind is a lending attorney at Lerch,
(301) 657-0750
awrind@
lerchearly.com

Early & Brewer who represen...
For mor e infor mation
Lerch, Early & Brewer, Chtd.
3 Bethesda Metro Center
Suite 460
Bethesda, MD 20814
(301) 986-1300
ww...
www.lerchearly.com

66

© Lerch, Early & Brewer, Chtd. 2013

www.lerchearly.com
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lerch early sba sop 50 10 5(f) update

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What you need to know about the new SBA SOP 50 10 5(f), which contains updated requirements for lenders and Certified Development Companies (CDCs) to participate in SBA lending programs. It takes effect January 1, 2014.

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  • Streamline process
    SBA’s goal with these revisions was to increase the number of small loans (SLA) - SLA designation will disappear in future SOPs
    Loans $350,000 and under – SBA looks towards bank’s current policies for similarly sized non-guaranteed loans
    Loans over $350,000 – new underwriting requirements, revised collateral requirements
    Applies to all regular loans (including CAPLines, PLP and CLP processed)
    SBA Express, Patriot Express, Export Express and Community Advantage – generally continues as in SOP 5010 5(e)
    Small Rural Lender Advantage – to be discontinued
    Changes facilitate underwriting of small eligible loans to existing lender process
    Major revisions to SOP are in:
    Credit underwriting
    $350,000 and under - Credit Scoring Model
    Collateral requirements
    $350,000 and under - Use of commercially reasonable and prudent practices, same procedure as similarly sized non-SBA guaranteed loans
    Over $350,000 – elimination of certain personal asset requirements
  • What was previously referred to as SLA (≤$350,000) has one set of underwriting criteria, standard has moved towards underwriting to document the ability of the loan to cash flow- Global cash flow analysis
    Loans ≥ $350,000 have a separate set of underwriting criteria, also based on DSC ratio
  • lerch early sba sop 50 10 5(f) update

    1. 1. SBA SOP 50 10 5(F) Pre s e nte d to s p o ns o ring o rg a niz a tio n Alison W. Rind Arnold D. Spevack Lerch, Early & Brewer, Chtd. www.lerchearly.com November 20, 2013
    2. 2. Today’s Program      2 Overview Credit Underwriting Collateral Requirements Eligibility Miscellaneous © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    3. 3. Overview 3 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    4. 4. Pur pose of New SOP  Streamline process  Facilitate underwriting of small    4 eligible loans to existing lender process Major revisions in Credit underwriting Collateral requirements © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    5. 5. Pur pose of New SOP (con’t)   5 What was previously referred to as SLA (≤$350K) has one set of underwriting criteria; move toward underwriting – global cash flow analysis Loans > $350K have separate set of underwriting criteria, based on DSC ratio © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    6. 6. Credit Underwriting 6 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    7. 7. Loans ≤ $350K → SOP at p. 161  Prescreen thru E-Tran If acceptable, apply thru E-Tran  If not Submit for standard processing (unlikely)  Process with Express and 50% guaranty via E-Tran  7 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    8. 8. Loans ≤ $350K (con’t)  Complete IRS verification before  8 submitting thru E-Tran New Form 450T Score calculated on consumer and business bureau data, borrower financials, application data © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    9. 9. Minimum Scor e  Based on lower end of risk profile of current SBA profile   9 Moving target Posted on the website www.sba.gov/for-lenders © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    10. 10. Cr edit Analysis – Demonstr ate Ability to Repay with Cash Flow  Brief history of business  Length of time under current  10 management DSC ratio of 1:10 on historical or projected cash flow © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    11. 11. Credit Anal ysis (con’t)    11 Owner/guarantor analysis – consistent with similarly-sized nonSBA guaranteed commercial loans May use own credit scoring criteria to assess applicant consistent as noted above Equity and pro-forma debt to worth determination based on above © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    12. 12. Loans >$350K → SOP at 163-165  Demonstrate ability to repay loan with cash flow 12 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    13. 13. Demonstr ating Ability to Repay    13 Brief history Length of time in business under current management Financial analysis of repayment ability based on historical financial statements (balance sheet, debt schedule, income statement) and/or tax returns and projections © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    14. 14. New Definition  New definition of operating cash flow - EBITDA 14 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    15. 15. Anal ysis of Cash Flow Impact  Unfunded capital expenditures  Non-recurring income  Expenses and distributions  Distributions for S Corp taxes  Rent payments  Owner’s draw  Effect of affiliated businesses 15 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    16. 16. Debt Ser vice  All principal and interest payments on all SBA debt inclusive of new SBA loan   16 DSC Ratio (OCF/DS) must be 1.15:1 or greater on historical and/or projected basis Document analysis of assumptions and projected cash flow © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    17. 17. Collateral Requirements 17 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    18. 18. Major Changes  What collateral must be taken  SBA’s appraisal and business   18 valuation standards Requirements re: securing personal guaranties Required insurance © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    19. 19. Until Januar y 1, 2014, Lender Must     19 Take 1st lien position on assets financed and Fully secure all loans based on liquidation value of collateral Must not decline loan solely because of collateral shortfall Take personal collateral when business collateral insufficient © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    20. 20. W hen 50 10 5(F) Takes Ef fect → SOP at 168     20 General requirements same as (E) Must identify collateral and use commercially reasonable and prudent lending practices Do not decline loans solely on inadequate collateral SBA guaranty ≠ available collateral © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    21. 21. W hen 50 10 5(F) Takes Ef fect (con’t) → SOP at 168  If loan proceeds used to  21 purchase assets, lender must have 1st lien If used to refinance debt, must have same collateral position and line priority as debt being refinanced © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    22. 22. Collateral Lender Must Take <$25K  Not required to take collateral 22 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    23. 23. Collateral Lender Must Take ≥$25K but ≤ $350K → SOP at 168 – Same as non-SBA BUT  Must obtain lien on applicant’s fixed assets at   23 minimum May take lien on trading assets (using 10% of book value) if does so for conventional loans See SBA provision for when SBA deems loan to be “fully secured” →SOP at 169 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    24. 24. Collateral Lender Must Take >$350K → SOP at 168  Must collateralize loan to max possible  If fixed assets do not fully secure, must take equity in personal real estate of principals  24 No longer lien on other personal property © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    25. 25. Collateral Lender Must Take SBA Express, Patriot Express, Export Express, EWPC, International Trade Loans  No change in collateral requirements 25 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    26. 26. Loan is “Full y-Secured” →SOP at 169  If lender has taken security  26 interests in all available fixed assets with a combined “net book value” as adjusted up to the loan amount. “Net book value” = asset original price less depreciation less amortization →SOP at 169 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    27. 27. New Language r e Spousal Guar antees →SOP at 169  27 “When individual alone or individual and his or her spouse together own 20% or more of the Small Business Applicant, the lender must consider taking as collateral available equity in personal real estate that is owned individually, by the applicant owner as well as available equity in personal real estate owned jointly. Real estate transferred by the applicant to the non-owning spouse within 6 months of the date of the application will not be exempt from consideration as available collateral.” © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    28. 28. Valuation of M&E →SOP at 169 New Used  75% of net book  50% of net book   28 value OR 80% with an Orderly Liquidation Appraisal minus any prior liens for the calculation of “fully-secured” value OR 80% with an Orderly Liquidation Appraisal minus any prior liens” © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    29. 29. Valuation of Real Estate →SOP at 169  85% of value for the calculation of “fully secured” and the value in accordance with SBA appraisal requirements 29 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    30. 30. Valuation of Fixed Assets →SOP at 169  If loan will be secured by fixed assets and valuation of fixed assets is greater than depreciated value (net book value), lender must obtain independent appraisal to support higher valuation 30 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    31. 31. A ppr aisal & Business Valuation →SOP at 171  Loans >$250K secured by real property – NO CHANGE in appraisal requirement  Federally regulated lenders 31 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    32. 32. Feder all y-Re gulated Lender s    32 Must obtain appraisal by state licensed or certified appraiser and follow primary regulators’ FIRREA requirements for real estate USPAP-compliant Dated within 12 months of application for guaranty © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    33. 33. Non-FRLs and SBLCs  Continue to adhere to prior SOP appraisal requirements 33 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    34. 34. A ppr aisal & Business Valuation (con’t)   34 New SOP revises Qualified Source List to delete a CPA, unless also holds listed designation →SOP at 174 Version 5(F) deletes requirement for business valuation when refinancing change of ownership “except for seller notes” →SOP at 115 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    35. 35. Equity Injection Requirements →SOP at 161 Loans > $350K ≤$350K  Begin with pre 35 screening for credit score Is equity and proforma debt-to-worth acceptable based on similar non-SBA loan?  Up to $5 million  No changes to SOP →SOP at 166-168 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    36. 36. Express, Expor t Express, Patriot Express Loans →SOP at 165    36 Credit decision left to business judgment of lender (includes consideration of past bankruptcy and any equity injection requirement) If requires for non-SBA, must do so for these Owners of ≥20% must inject liquid assets above certain thresholds © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    37. 37. Per sonal Guarantees and Guarantor Collateral →SOP at 168-170  Owners of ≥20% must provide  37 unlimited personal guaranty New language at beginning of Collateral Requirements © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    38. 38. Collateral Shor tfall with Inadequate Business Fixed Assets →SOP 169  Required to take equity in  38 personal residence (lien may be limited to amount of shortfall) Lien against residence/investment real estate may be limited to 150% of equity if there are tax consequences © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    39. 39. Collateral Shor tfall with Inadequate Business Fixed Assets (con’t)  No change in prior requirement  39 that non-owner spouse must provide limited guaranty needed to perfect lien on joint collateral Real estate transferred within 6 months of application not exempt © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    40. 40. Insur ance Requir ements →SOP at 187-188  Hazard insurance required on  40 assets pledged as collateral Flood insurance forms changed © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    41. 41. Life Insur ance →SOP at 188 and 189  SLA Loans, SBA Express, Export  41 Express and Patriot Express – May follow similar to non-SBA Loans >$350K – new language © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    42. 42. Life Insur ance on Loans >$350K     42 May use similar non-SBA policies EXCEPT If not fully secured, life insurance required for principals of sole proprietorships, single member LLCs or for businesses otherwise dependent on one owner Amount and type of collateral may be factored into amount of life insurance If lender determines principal is uninsurable, must obtain documentation from licensed insurer © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    43. 43. Eligibility 43 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    44. 44. Fr anchise Requirement Changes →SOP at 78  Language added re  44 determination for affiliation purposes Language added to permit PLP lenders to submit franchise agreement to SBA for eligibility determination © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    45. 45. Revisions re Ineligible Businesses →SOP at 89, 92  Financial advisors →SOP at 89  Involved in gambling →SOP at  45 92 Promoting religion →SOP at 92 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    46. 46. 912 Clear ance →SOP at 93  Principals are incarcerated, on   46 probation, on parole or under indictment “Deferred prosecution” record Obtain “complete understanding” for any “yes” response © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    47. 47. “Yes” Response Can Be Cleared If     47 Single minor (misdemeanor) offense or arrest Up to 3 minor offenses concluded more than 10 years ago Prior offense cleared by Director of Office of Financial Assistance (but only good for 6 months) →SOP at 96 912 Appeals → SOP at 98 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    48. 48. Refi of Existing 504 with 7a →SOP at 117    48 May refinance a 504 loan with a 7a loan if the transaction meets the requirements in the SOP Both Third Party Loan and 504 being refi’d OR Third Party Loan paid in full and 504 needs refi as part of larger transaction to provide funding for expansion or renovation of Project Property  Must document justification  Applicable 504 prepayment penalties apply © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    49. 49. Application Process 49 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    50. 50. A pplication New For ms →SOP at 197     50 Form 1919 (Borrower’s Info) and Form 1920 (SX) – IDs eligibility issues: Use for all 7(a) loan types Forms not completed yet Form1919 includes Forms 601, 1261, 1624 and 912 1920(SX) does not include eligibility worksheets (save old for reference and save in each loan file) © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    51. 51. E-Tran ≤$350K →SOP at 202  DUNS # required – Startups  51 must apply for DUNS # for ETran submission If credit scoring acceptable, complete app to get PLP # (or then submit CLP for credit underwriting) © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    52. 52. E-Tr an >$350K →SOP at 202  Forms 4 and 4(I) no longer to be used  Collateral list not included in new forms – must still collect collateral listing  May want to use template 52 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    53. 53. Miscellaneous Changes 53 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    54. 54. CAPLine – Wor king Capital Lines Disbur sement →SOP at 217-226  Borrowing base OR  1:1 collateral ratio clarification  54 Includes valuation of real estate owned at 85% © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    55. 55. CAPLine – Pr oceeds of Collections →SOP at 217226  Must pay down the line  Consistent with borrower’s operating cash cycle 55 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    56. 56. CAPLine – Inclusion of Receivables →SOP at 217226  Subcontracts that are foreign AR issued by Export-Import Bank or major private insurer can increase advance rate to 90% 56 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    57. 57. CAPLine – Annual Review →SOP at 217-226  If maturity coincides with scheduled annual review, lender may advance on line up to maturity in conjunction with similar non-SBA loans 57 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    58. 58. Financial Statements →SOP at 198  Business financials – 180 days  Personal financials – 90 days 58 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    59. 59. Loan Documentation  Form 1050 no longer required for   59 ≤$350K (still document disbursements) May use own forms with language added (Form 147, 148) If it ain’t broke, don’t fix it © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    60. 60. 504 Credit Standar ds →SOP at 237  Clarification: Credit reports only required for  Small business concern  Owners  Guarantor affiliates 60 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    61. 61. 504 Credit Standar ds (con’t)  Documentation required for Third Party Loan →SOP at 239  LOI  Term sheet  Commitment letter 61 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    62. 62. 504 Credit Standar ds (con’t)  If Third Party Loan provides preference in commitment/term sheet, issuance of Authorization is considered prior written consent to preference 62 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    63. 63. 504 Credit Standar ds (con’t)  SBA may now participate in projects financed with obligations exempt from state and local taxes →SOP at 243  Industrial development bonds  Industrial revenue bonds 63 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    64. 64. Speaker s  Alison Rind is a lending attorney at Lerch, (301) 657-0750 awrind@ lerchearly.com Early & Brewer who represents commercial lenders in loan transactions and other commercial matters. These include participants in SBA and other government-guaranteed lending programs.  Arnie Spevack is an attorney at Lerch, (301) 657-0749 adspevack@ lerchearly.com 64 Early & Brewer who represents individuals, businesses, lenders and borrowers in financings, closings, negotiations and in the courts. © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    65. 65. For mor e infor mation Lerch, Early & Brewer, Chtd. 3 Bethesda Metro Center Suite 460 Bethesda, MD 20814 (301) 986-1300 www.lerchearly.com Thank you for your participation 65 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com
    66. 66. www.lerchearly.com 66 © Lerch, Early & Brewer, Chtd. 2013 www.lerchearly.com

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