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Best Practices: Litigation Expenses and PPP Loans: What is a Lender to do?
By: Lyndsay E. Rowland, Esquire
In this, our third article on SBA Procedural Notice No. 5000-812316 (the “Procedural Notice”), we turn our attention to potential litigation scenarios involving PPP loans and the choices a lender must make. Before the Procedural Notice was released last month, most lenders had been guided by SOP 50 57 2 (the “SOP”), including its Chapter 21 which addresses when lenders will need to submit litigation plans. In an about-face, the Procedural Notice offered lenders a very different path than the one in the SOP, a path more geared to PPP lending. Specifically, page 3 of the Procedural Notice states that SBA “does not anticipate a need for lenders to incur expenses relating to litigating the loan” as these PPP loans are 100% guaranteed and unsecured. SBA does advise that it will honor litigation plans that have been approved by the SBA prior to issuance of the Procedural Notice; however, effective July 15, 2021, SBA will generally not approve litigation plans unless there appears to be a reasonable expectation of recovery in excess of legal and administrative expenses.
IN THE SPOTLIGHT
Victor A. Diaz, Esquire
Victor is the Managing Partner of Starfield & Smith’s Florida office where he concentrates his practice in the areas of financial, commercial, transactional and property law, with emphasis on the representation of financial institutions involved with SBA lending programs. Victor represents numerous national, regional and local banks, credit unions and development companies. He has closed thousands of commercial transactions from complex real estate and business acquisitions to simple business startups. He is a Designated Closing Counsel for several Certified Development Companies that operate in the State of Florida. He draws on his extensive experience to provide outstanding service and legal representation to his lender clients. Victor has been recognized for possessing the highest levels of professional skills and ethics with an “AV Preeminent Rating” from Martindale Hubbell.

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SEMINARS AND EVENTS

FLAGGL
When: September 20 - September 22, 2021
Where: JW Marriott Orlando Grande Lakes

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Great Lakes Lenders Conference
When: October 12 - October 14, 2021
Where: Detroit Marriott at the Renaissance Center

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NAGGL Annual
When: October 27 - October 29, 2021
Where: Manchester Grand Hyatt Hotel, San Diego, CA
Please note the date change for NAGGL Annual

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Southeastern Small Business Lender's Conference 2021
When: June 8 - November 9, 2021
Presented by: Georgia Lenders Quality Circle

Please note that this conference has been changed to an all-virtual format via a series of monthly sessions on the second Tuesday of each month from 11:30-12:30 pm Eastern time.

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