hergenroeder rega ewing kennedy llc skennedy@hrslaw com phone 412 208 3310 fax 412 281 6153 n.
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Hergenroeder Rega Ewing & Kennedy, LLC skennedy@hrslaw.com Phone 412.208.3310 Fax 412.281.6153. SBA Authorization:. Review Carefully Check Note repayment terms Check names Check collateral Check equity Check use of proceeds. Change Letters:.

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hergenroeder rega ewing kennedy llc skennedy@hrslaw com phone 412 208 3310 fax 412 281 6153
Hergenroeder Rega Ewing & Kennedy, LLCskennedy@hrslaw.comPhone 412.208.3310Fax 412.281.6153
sba authorization
SBA Authorization:

Review Carefully

Check Note repayment terms

Check names

Check collateral

Check equity

Check use of proceeds

change letters
Change Letters:

If Authorization is incorrect, prepare change letter and send

If you have any doubt about what is in the Authorization do a change letter

loan fee
Loan Fee

Collect and submit timely

1050 use of proceeds with copies of checks
1050/Use of Proceeds with copies of Checks:

Only get one form signed

MUST HAVE AN AUDIT TRAIL

Must comply with use of proceeds in Authorization

Must match disbursements with use within 10%

Watch out for EPC/OC. No Working Capital

mortgagee title insurance policy
Mortgagee Title Insurance Policy:

Have reviewed by experienced person

Less is more, the more exceptions the less coverage

Watch out for:

Use covenants

Existing liens

Some standard Endorsements

Oil and Gas

survey
Survey:

Should have with new construction

Look for encroachments

Look for access

evidence of balance due on first mortgage
Evidence of balance due on first mortgage:

Verify balance

Determine if Open End

Watch for HELOC

Future Advances

pre closing ucc and other searches
Pre-Closing UCC and Other Searches:

Check all jurisdictions

Check Bankruptcy

Check Judgments

Credit Report will have

Order right away to avoid problems

POST CLOSING UCC SEARCH:

Verify Priority

Good to pre-file

ucc 1 financing statements
UCC-1 Financing Statements:

Be certain of name

Be certain of where to file

Watch out for collateral that must be in possession of Secured Party (stocks)

Process filing takes 7-10 business days

Pre-file

pledge of stock
Pledge of Stock:

Similar to Security Agreement

Sometimes done if business is licensed

May need to posses stock

control agreement
Control Agreement:

Need for uncertificated stocks, investment accounts, etc.

Only way to get to the Collateral and only way to perfect security interest

stock power
Stock Power:

Done with Stock Certificates

Sign in blank

lease
Lease:

Must match term of Loan

If you don’t care do a change letter because Authorization requires the term of the lease to be as loan as the loan

May include renewal options as long as tenant can exercise unilaterally

landlord waiver
Landlord Waiver:

Subordinate Landlord lien to Bank lien

Must be able to cure default, so need notice of default and opportunity to cure

Must have access to collateral

Problem if you don’t get it

assignment of tenant s interest in lease
Assignment of Tenant’s Interest in Lease:

Rare, but sometimes required

Difficult to get

May not want it

liquor license
Liquor License:

A license is a privilege

In Pennsylvania you can take security interest but subject to Liquor Control Board

You can get interest in the ability to transfer

General Intangible under UCC-1; someone else may have a lien already

Should be mentioned in both the Security Agreement and the UCC-1

If the business closes down, you may want to remove the license

liquor license power of attorney
Liquor License Power of Attorney:

Good to have so that you can work with Liquor Control Board and taxing authorities, Pennsylvania Department of Revenue

Allows lender to execute transfer documents and fill out forms

franchise offering agreement
Franchise Offering/ Agreement:

Whole process in SOP

Be sure you have all the Franchise Documents and all signed

Franchisor should certify that these are all the documents

Careful! May render Loan ineligible!

agreement of franchise to cure default
Agreement of Franchise (to cure default):

Requires notice of default and opportunity to cure

Defer franchise fees is Loan is in default (hard to get)

Access to Franchisor’s books as they pertain to Borrower

certificate of insurance for real and personal property listing
Certificate of Insurance for real and personal property listing

Make sure in place

Change Endorsement

Copy of Declarations page

Mortgagee/Lender Loss Payee

workers compensation insurance
Workers Compensation Insurance:

Must have if they have employees

life insurance
Life Insurance:

Be certain Insured is correct

Owner may be other than insured

Copy of the policy

Term long enough for loan?

Be sure in correct amount

collateral assignment of life insurance
Collateral Assignment of Life Insurance:

Must be signed by OWNER of the policy

Must not be assigned to anyone else

Must be correct Insured

Must be correct Amount

Must be assigned as Collateral, NOT CHANGE IN BENEFICIARY

partnership authorization and partnership agreement
Partnership Authorization and Partnership Agreement:

Check all parties

Be sure allow for Confession of Judgment whether a GP or an LP

If not all Partners must sign authority of one Partner to sign Confession of Judgment

standby creditor s agreement sba form 155
Standby Creditor’s Agreement (SBA Form 155):

Get copy of Standby Note

Compare to be sure it is correct

Be sure you have payee on Note as Standby Creditor

copy of standby note with endorsement
Copy of Standby Note with Endorsement:

If no Note, tell them to draft one

Have Note endorsed as follows:

“This Note is subject to the terms and conditions of a Standby Creditor’s agreement between Payee and ____________ (Bank) dated the _____ day of _____________, 20__”

evidence of equity
Evidence of Equity:

Critical

I prefer an Affidavit

One of the first things looked at

Cash is King

In kind must be supported by appraisal (I would be sure SBA agrees)

Careful about where it comes from, there are many specific rules about this

compliance with bulk sale provisions
Compliance with Bulk Sale Provisions:

Purchase of more than 51% of assets

Pennsylvania Department of Revenue clearance

Escrow/Indemnification

Verify payment of seller taxes

complete equipment list
Complete Equipment List:

Important as this is required by Authorization under collateral where security interest is listed

Should have list of all equipment

All equipment over the value of $5,000 should have a complete description with serial number

hud 1 settlement sheet
HUD-1 Settlement Sheet:

Good way to track use of proceeds

bill of sale
Bill of Sale:

Same as a Deed for personal property

business licenses permits ein certificate of occupancy
Business Licenses, Permits, EIN, Certificate of Occupancy:

Must have EIN

If Borrower requires a license, need a copy (attorney, barber, restaurant with liquor license, dentist, doctor, etc.)

Pennsylvania contractors are required to have permits

non compete agreement
Non-Compete Agreement:

Good to have in a business acquisition

Be sure the principal or principals of the seller are bound. No good if seller is a corporation and person that can compete is an individual. They are not bound.

fixed price contract
Fixed Price Contract:

Protects Lender and Borrower

Must match use of proceeds

collateral assignment of construction documents
Collateral Assignment of Construction Documents:

Need if you have to complete work

occupancy certificate
Occupancy Certificate:

Post closing

Very important for new construction and leasehold improvements

earthquake compliance
Earthquake Compliance:

New construction only