SBA QUIRKS:


  1. SBA doesn't pay brokers. Therefore the fee you  negotiate with us must be collected outside closing. The fee cannot be included on the closing statement. But it is well worth the money to have us help you navigate the maze of rules and regs.
  2. SBA requires lender to collateralize loan to maximum extent possible up to loan amount. If business assets are insufficient, the lender must take available personal assets of the principals as collateral. If your personal residence has equity in excess of 75% of its fair market value, the lender will take a junior lien position on the home to secure the SBA loan.
  3. Any owner who answers affirmatively on 912  Personal History Statement must provide documentation for submission to SBA Office of Inspector General for character determination. However, it is recommended that the individual also complete a fingerprint card which will instead earmark the packet for submission to FBI for fingerprint check and character determination. FBI determination is usually faster than OIG.
  4. Construction provisions are designed to (a) control and document use of loan proceeds and (b) to protect the interests of the borrower. Construction projects must be documented that they comply with national standards such as Natl Earthquake Hazards, Handicap Accessibility, etc. Normally can be proved by certification of architect/engineer or letter from local government stating local building requirements meet standards and that occupancy permit requires compliance. DO it yourself construction projects are generally ineligible.
  5. Cash injection must be proven and sourced. This is even more significant now. if the borrower intended to use a HELOC for injection, you need to draw the funds and put them into a deposit account a month prior to submission of application. To close we will need to show 2 to 3 months of bank statements
100% LTV Loans
Any existing business buying or constructing mutli-purpose, also called general purpose, commercial real estate. Office or warehouse space, retail space, office condos, anywhere in the nation except Hawaii.

Requirements:
Business must have been operating for minimally two years
Must show ability to repay debt 1.15x for the last fiscal year plus interim period
Requires 10% equity injection

For instance:
  • $1,000,000 real estate purchase
  • $300,000 purchase furniture, fixtures, equipment, moving expenses
  • $30,000 SBA guaranty fee
  • $20,000 closing costs
  • $1,350,000 Project Costs
  • $135,000 equity injection 10%
  • $1,215,000 Loan amount

Your out of pocket $135K. If done conventionally, the bank would finance 80% of the purchase and none of the other expenses, and you would be out of pocket $550K.Not only does this greatly reduce your actual out of pocket expenses, it allows you to invest TIME to build equity in the real estate rather CASH.

The 100% LTV financing option allows all expense related to the project to be considered. We are essentially financing 90% of the project COSTS

Another example:
  • $350,000 office condo
  • $250,000 renovations/build-out
  • $50,000 soft costs, contingencies, interest reserve
  • $500,000 dental equipment
  • $50,000 office equipment, furniture
  • $50,000 working capital
  • $50,000 closing costs and SBA guarantee fee
  • $1,300,000 Total (Project Costs)
  • $130,000 10% injection
  • $1,287,000 Loan Amount

Your out of pocket $130K. If done conventionally you would have several loans, one for real estate, one for equipment, and one for working capital. The equipment and LOC are relatively high rates, short term loans. Even the real estate loan would balloon in 2 years requiring a renegotiation of the rate. And your out of pocket expense would likely be $270K.