SBA Form 160

Navigating the Complexities of Board Resolutions for SBA Loans

What is SBA Form 160 and why is it important?

SBA Form 160, also known as the Resolution of Board of Directors, is a crucial document required by the Small Business Administration (SBA) for businesses applying for SBA-guaranteed loans. Its importance stems from several key factors:

Loan Authorization: It officially authorizes the company to apply for and accept an SBA loan.

Corporate Governance: It demonstrates proper corporate governance and decision-making processes.

Legal Compliance: It ensures compliance with SBA requirements and corporate bylaws.

Designation of Authority: It officially designates who has the authority to act on behalf of the company in loan matters.

Loan Terms Acceptance: It shows the board's acceptance of the proposed loan terms and conditions.

Risk Management: It helps manage risk by ensuring board-level approval for significant financial decisions.

Transparency: It provides transparency in the company's decision-making process for stakeholders.

Audit Trail: It creates an official record of the board's decision for future reference or audits.

What key information should be included in SBA Form 160?

A properly completed SBA Form 160 should include the following key information:

Company Name: The full legal name of the business entity.

Date of Meeting: The date when the board meeting took place to pass the resolution.

Resolution Text: The exact wording of the resolution passed by the board.

Authorized Person: The name of the individual authorized to act on behalf of the company.

Authorized Title: The official title of the authorized person within the company.

Loan Amount: The specific amount of the SBA loan being applied for or approved.

Lender Name: The name of the financial institution providing the SBA-guaranteed loan.

Secretary Name: The name of the corporate secretary or person certifying the resolution.

Signatures: Signatures of the authorized person and the certifying official.

Certification Statement: A statement certifying that the resolution was duly adopted by the board.

Corporate Seal: If applicable, the corporate seal should be affixed.

Quorum Statement: Confirmation that a quorum was present for the board meeting.

Voting Results: The results of the vote on the resolution (e.g., unanimous, majority).

Reference to Bylaws: A statement that the resolution complies with company bylaws.

How does SBA Form 160 differ from other corporate resolutions?

SBA Form 160 differs from other corporate resolutions in several key ways:

Specific Purpose: It is specifically designed for SBA loan applications, unlike general corporate resolutions.

Standardized Format: It follows a standardized format required by the SBA, ensuring consistency across applications.

Required Information: It includes specific information required by the SBA, such as loan amount and lender name.

Legal Weight: It carries particular legal weight in the context of SBA loans and federal regulations.

Limited Scope: It focuses solely on authorizing the SBA loan, whereas other resolutions may cover various corporate actions.

Regulatory Compliance: It ensures compliance with SBA regulations, which may be more stringent than general corporate law.

Federal Oversight: It is subject to federal oversight and scrutiny as part of the SBA loan process.

Timeline Specificity: It often includes specific dates and timelines related to the SBA loan application process.

Authorized Signatories: It may have more specific requirements about who can sign and their titles within the company.

Certification Requirements: It includes specific certification language required by the SBA.

What are the legal implications of submitting SBA Form 160?

Submitting SBA Form 160 carries several important legal implications:

Legal Binding: It legally binds the company to the terms and conditions of the SBA loan.

Federal Compliance: It signifies compliance with federal regulations governing SBA loans.

Corporate Liability: It creates corporate liability for repayment of the loan and adherence to loan terms.

Personal Liability: It may create personal liability for company officers in cases of misrepresentation.

Audit Exposure: It exposes the company to potential audits by the SBA or other federal agencies.

False Statements Act: Submitting false information can lead to prosecution under the False Statements Act.

Corporate Governance Record: It becomes part of the official corporate record, potentially affecting future decisions.

Stakeholder Obligations: It creates obligations to stakeholders to use the loan funds as specified.

Default Consequences: In case of default, it can be used as evidence in legal proceedings.

Public Record: As part of an SBA loan application, it may become part of public records.

Future Loan Implications: It can affect the company's ability to secure future loans or government contracts.

Regulatory Scrutiny: It subjects the company to ongoing regulatory scrutiny throughout the loan term.

What are common mistakes to avoid when completing SBA Form 160?

When completing SBA Form 160, it's important to avoid these common mistakes:

Incomplete Information: Failing to fill out all required fields on the form.

Incorrect Company Name: Using an abbreviated or informal version of the company name instead of the full legal name.

Wrong Meeting Date: Providing an incorrect date for the board meeting.

Vague Resolution Language: Using ambiguous or non-specific language in the resolution text.

Unauthorized Signatories: Having the form signed by individuals not authorized by the board.

Missing Titles: Omitting the titles of the individuals signing the form.

Incorrect Loan Amount: Stating a loan amount that doesn't match the loan application.

Missing Corporate Seal: Failing to affix the corporate seal if required by company bylaws.

Inconsistent Information: Providing information that contradicts other application documents.

Outdated Form Version: Using an outdated version of SBA Form 160.

Inadequate Certification: Failing to properly certify the resolution's adoption by the board.

Missing Quorum Statement: Neglecting to confirm that a quorum was present for the board meeting.

Improperly Executed: Not having the form properly signed and dated by all required parties.

Failure to Retain Copy: Not keeping a copy of the completed form for company records.