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What is a Seller's Pool Loan? A Comprehensive Legal Overview
Definition & Meaning
A seller's pool loan is a type of financing sold to a pool originator under a specific agreement known as the First Lien Position 504 Loan Pool Guarantee Agreement. This arrangement allows lenders to sell their loans to a secondary market, providing them with liquidity and enabling them to fund more loans. Essentially, it facilitates the process of pooling loans to manage risk and enhance capital flow in the lending market.
Table of content
Legal Use & context
The term seller's pool loan is primarily used in the context of business financing and loan management. It is relevant in areas such as:
Commercial lending
Real estate financing
Small business administration loans
Users may encounter this term when dealing with loan agreements or financial transactions involving pooled loans. With the right tools, such as legal templates from US Legal Forms, individuals can manage related documentation effectively.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A small business owner secures a loan through the SBA and later sells it as a seller's pool loan to a financial institution. This allows the lender to reinvest in additional loans.
Example 2: A bank participates in a seller's pool loan arrangement to diversify its loan portfolio and reduce exposure to individual borrowers. (hypothetical example)
Relevant laws & statutes
Seller's pool loans are governed by regulations outlined in the Small Business Administration (SBA) guidelines, particularly under 13 CFR 120.1700. This regulation details the establishment of the SBA Secondary Market Guarantee Program for first lien position 504 loan pools.
Comparison with related terms
Term
Definition
Differences
Pool Loan
A loan that is grouped with others for sale on the secondary market.
Seller's pool loan specifically refers to loans sold to a pool originator.
SBA Loan
Loans backed by the Small Business Administration.
Seller's pool loans are a subset of SBA loans that are sold in pools.
Common misunderstandings
What to do if this term applies to you
If you are considering a seller's pool loan, it is important to:
Understand the terms of your loan agreement.
Consult with a financial advisor to assess your options.
Explore US Legal Forms for templates related to loan agreements and other necessary documents.
Seek professional legal help if your situation is complex.
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