We are grateful to Brian Rogers, Blue Maven Law LLC, for presenting “Legal Topics for Business Owners” at our February 8, 2022, membership meeting.
Brian has graciously shared the slides from his presentation.
Expansion through acquisition financing at Live Oak Bank
We are grateful and appreciative for the time spent discussing Mergers and Acquisition Lending at Live Oak Bank in weeks past. A leading advantage of expansion through acquisition is this: borrowers may not need much equity, broadening your pool of prospective buyers. We were pleased to see many of you expressing interest in the product.
This product helps target industry competitors as potential buyers for your listings. The strategic acquisition of a competitor might be your key to gaining market share, expanding product lines, cross-selling to customers, and increasing pricing power. Live Oak Bank’s Expansion through Acquisition financing helps make this happen.
If you’re not familiar with our expansion through acquisition financing or you’d like to learn more, let’s connect. In the meantime, check out our information on the benefits and qualifications for expansion through acquisition, and feel free to share it with your customers and prospective buyers.
Learn more about SBA Combination Financing Solutions
About Live Oak
Live Oak Bank is the #1 SBA lender in the country (by dollar volume). Live Oak specializes in acquisition financing across all industries nationwide and has Preferred Lender Partner (PLP) status with the SBA. This enables Live Oak customers to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not PLP Lenders. Live Oak brings efficiency and excellence to the banking process, without branches, by using a focused approach to technology and innovation.
To learn more about The Live Oak Difference, please visit our website.
Best regards,
Paul Moreno, 214-289-2536, paul.moreno@liveoak.bank
Brian Hunt, 214-802-7411, brian.hunt@liveoak.bank
Updated SBA Form 159 and Instructions Regarding Submission Issued Nov 12
Monday, November 15, 2021
by John Vitale, MBA Commercial Relationship Manager Midland States Bank
SBA Procedural Notice 5000-821479, Issuance of Updated SBA Form 159 and Revised Procedures in SOP 50 10 6 for Submission of the Form (effective November 12, 2021), announces issuance of the revised SBA Form 159, Fee Disclosure and Compensation Agreement, and details the changes to the form. It also revises the procedures governing submission of the completed form to SBA by lenders. [SOP 50 10 6, Part 2, Section A, Chapter 5, Paragraph D.8.e. (p. 191) – for 7(a) Lenders – and Paragraph E.7.c.iv. (p. 201) for CDCs.] Lenders must begin using the new form immediately for new loan applications, but may continue to approve the previously approved version for applications already in process.
Per the notice, the substantive revisions to the 159 form include:
- Clarification that a separate Form 159 must be completed for each application when an Agent provides services to an Applicant in connection with multiple applications, and explanation of the new procedure for submitting completed forms and supporting documentation;
- Revisions to guidance regarding the itemization of services provided and the requirements for supporting documentation;
- Deletion of references to FTA/Colson Service mailbox since that email account is no longer active; and,
- New requirement that the lender use its 6-7 digit Location ID instead of its FIRS number to identify itself.
Effective immediately, the lender must submit all required executed SBA Forms 159, together with any required supporting documentation electronically to SBA’s Capital Access Financial System (CAFS) at https://caweb.sba.gov. After initial disbursement of the loan, the required form(s) and documentation must be uploaded into E-Tran Servicing in conjunction with the Lender’s monthly SBA Form 1502 report with submission required within two 1502 reporting cycles. There is no change to the requirement that 7(a) Lenders retain original signature versions of all 159 forms and all supporting documentation in their files for compliance review purposes. [Similar procedural changes are provided for forms and supporting documentation required in connection with 504 loans.] Please see the revised Form 159 and notice for full details.
Read MoreThe Independent Contractor Revisited
As the federal government and the state governments look for more ways to bring in money, the independent contractor status is a likely place for them to look. After all, by using independent contractors rather than employees, employers don’t have to withhold taxes, provide workers’ compensation, contribute to unemployment compensation, or provide any benefits such as 401-k programs, health insurance or other benefits. Plus you can use and discontinue independent contractors as needed.
Certainly, in this age of home-based businesses, the use of outside sources makes a lot of sense. Outsourcing a lot of business needs has been done for years and will only increase with growth of small business. Most one-person and small businesses don’t need full-time employees. Many requirements can be outsourced to independent contractors who in turn outsource many of their requirements.
It is the use of workers who are classified as independent contractors, but are really employees that can cause legal issues. FedEx Ground has been in the middle of this type of legal dispute for several years. FedEx claimed that their drivers were franchisees and therefore independent contractors; several drivers (and later the IRS) challenged that status, claiming that the drivers were really employees.
Here are some basic distinctions between independent contractors and employees:
Lack of employers’ direction is one major difference. In other words, the worker is left to his or her devices and does what the particular job requires without direction from the employer.
Is the worker working primarily for one employer or working for several employers on an as needed basis?
The worker is not in the same general business as the employer. A full-time consultant in the same line of business as the employer might be considered an employee. If the employee has his or her own business and also works for other companies, he probably would be considered an independent contractor.
Just because the worker creates an LLC or even an S-corporation doesn’t necessarily protect both sides from being classified as an independent contractor.
The federal government and the states are narrowing the definition of an independent contractor. One must definitely be truly independent to be considered an independent contractor. FedEx franchises (for lack of another term) wear FedEx garb, have FedEx logos on their trucks, and deliver FedEx packages on defined routes. However, we understand that they buy their own trucks and can sell their FedEx routes. But, consider the old saying: If it looks like a duck, acts like a duck and makes duck-like noises, there is a very good chance it is a duck. The battle goes on, but the penalties for violating the status of your people can be very expensive.
Entrepreneurship Is Alive and Well!
A recent article in the Boston Globe reported that although more attention is on the large, primarily publicly held companies, more and more people are making their living by operating their own businesses. In fact, nationally, over 500,000 new businesses are started every year. What this means is that over 10 percent of workers are “either starting a business or working at one that is less than 3 1/2 years old.” And, as indicated by frequent reports, new businesses create new jobs.
Those people who start businesses generally do not have their own funds available for start-up expenses. This is due in part to the fact that bank and SBA funding is not available to them. In addition, fewer than seven percent of new or prospective business owners will receive actual venture capital funds. So, where does the money come from? Second mortgages, credit cards, and family loans are the most common sources of start-up funds. The Globe added that “over the past few years, more than 80 percent of Inc. Magazine’s Fast 1000 companies have been started with about $50,000 or less.”
The article concluded with a plea for “seed” capital and funding from both public and private sources. Perhaps this article and similar ones will lead the way towards the recognition that those who own and operate their own businesses deserve a less arduous journey toward making the right start.