The FDI loan agreement (which you can read here in its entirety) currently indicates that the need for the SBA agreement depends on the security of the FDI. SBA needs guarantees to guarantee all IEDS over $25,000.  Although the SBA favours real estate guarantees, it often requires a general security interest for all the borrower`s physical and intangible personal real estate in order to secure FDI. The guarantee agreement states that “without the written agreement of the SBA, the borrower does not sell, lease, grant or otherwise transfer the guarantee or the borrower`s participation in the guarantees (including by granting security interest, pledges or other charges).  Lenders often need guarantees for small business loans. And SBA loans generally require guarantees, although this requirement has been waived for small FDI loans linked to Covid-19. The eidl agreement requires any borrower who accepts a loan of more than $25,000 to promise a broad list of guarantees: given the uncertainty of the current business environment, it is not surprising that borrowers are concerned about what happens if they cannot repay their loans from the SBA oath. The FDI`s loan contract states that this question about the language of personal guarantee in the eidl contract can split like hair, but it shows how important it is to read the loan contracts for small businesses before signing them. It`s not always easy or enjoyable, but it`s important. No legal expert? Most of us are not. So if you commit your business or yourself to repay thousands of dollars, it`s a good idea to have a small business lawyer who can help you review the agreement. Your mission is to protect your business.
And that means you need to check and understand credit contracts before you sign in order to make an informed decision. Parties considering a strategic transaction should carefully review the corresponding PPA note, loan agreement and all other certificates issued to the P3 lender to determine whether the lender`s approval or default is appropriate. While there is no formal advice from the SBA to this effect, there is a potential risk that a borrower will lose its ability to obtain a loan if its PPP loan is late, even if the lender does not call the lender. By signing the FDI loan agreement, the borrower requires the borrower to accept the non-distribution of assets: millions of small entrepreneurs who have obtained a loan under the Economic Injury Disaster Loan (EIDL) program have been discharged to be approved through the Small Business Administration (SBA) for one of these low-interest loans. But some experienced borrowers, who have carefully checked their loan contracts, have objected to seemingly incriminating provisions imposed on borrowers, including confusing and contradictory language about personal guarantees.