Practical Tips for Lenders: Navigating the Gauntlet of Government-Guaranteed Loans
Lane Powell attorneys Randy Beighle and Dan Kittle co-authored an article in the Winter 2012 issue of Community Bankers of Washington’s (“CBW”) Community Banker magazine titled “Practical Tips for Lenders: Navigating the Gauntlet of Government-Guaranteed Loans.” In the article, Beighle and Kittle discussed government-guaranteed loan programs and how they can enhance lenders’ credit. They also discussed a number of tips to help lenders avoid some of the pitfalls in the loan application process.
Government-guaranteed loans have long assisted lenders by bolstering private credit structures where lenders may otherwise hesitate to extend credit. For instance, in 2011 the United States Department of Agriculture’s Rural Development Program alone provided nearly $900 million in funding through various loan programs in Washington state. Lenders also often turn to the Small Business Administration’s (“SBA”) guaranteed loan programs to bolster credit, including SBA’s 7(a) Loan Program or 504 Loan Program. The primary benefit of these programs is that the government’s guarantee is an “obligation supported by the full faith and credit of the United States” and is “incontestable” by the agency, except in limited circumstances involving fraud or misrepresentation.