Frequently Asked Questions
What is a Certified Development Company (CDC)?
- Analyze your funding alternatives and best solutions
- Prepare application documents to emphasize your business’s strengths
- Present plans to overcome any weaknesses or deficiencies
- Introduce your project to lenders who are eager to work with you
- Work with your lender
- Coordinate with other agents, including legal advisors, financial advisors and others as needed
- Make the financing process as smooth and trouble-free as possible
- Work with the SBA to ensure your loan approval
What areas do you serve?
What is the maximum loan amount?
- Identify strengths of client companies
- Provide steps to minimize weaknesses or deficiencies
- Simplify the application-to-approval process
- Expedite the process for quick turnarounds
- Close deals with our excellent approval rate
- Provide expertise based on training and experience with the complex regulation and lending environment
Can equipment be financed?
Can soft costs be financed?
Yes. Transaction costs such as appraisal and environmental reports, title policy, loan fees, construction monitoring, interim interest, architect fees, and engineering fees are some of the soft costs that can be financed.
What cannot be financed?
We cannot finance working capital, inventory, goodwill, and ineligible closing costs.
What types of businesses are eligible?
The program is offered to a wide range of businesses in the retail, manufacturing, service, and hospitality industries. The business must be a ”for profit” enterprise with a tangible net worth not to exceed $15,000,000 and/or net profit after taxes of no more than $5,000,000 for the previous two years.
How much space does the business have to occupy?
If you are purchasing a new building, you must occupy 51%. If you are building a new building, you must occupy 60% with intentions of increasing your occupancy up to 80% over a three year period. The remaining 20% may be leased out.
I am expanding my business. Could I get an SBA loan to refinance my current property?
You can refinance existing debt related to fixed assets if you also borrow money to finance more real estate or equipment through an expansion project. The amount of debt being refinanced must be 50% or less of the total cost of expansion.
Are there other requirements for SBA loans?
If a public goal is not achieved, or your project is not certified as “Green,” you will need to hire one new full-time employee for every $65,000 that we loan.
Can I borrow part of my down payment?
Yes. This must be disclosed, and the terms reviewed, before approval.
The borrowed loan cannot be paid back at a faster rate than the SBA’s portion, and if the borrowed contribution is collateralized by assets other than the project property, the borrower must demonstrate repayment of the loan for its contribution from the cash flow of the business or other sources.
Can my loan be assumed?
Yes. Your loan can be assumed if you choose to sell your building. You will need to contact our servicing department.
Who is required to guaranty an SBA loan?
Any owners of 20% or more are required to guaranty. This includes owners of the operating company and the borrowing entity. Anyone that is a guarantor on the banks first lien loan will be required to be a guarantor on the SBA loan, regardless of ownership percentage.
What fees are involved in your process?
We request a $2,500 application deposit. which is applied towards your loan fee. Our loan fee is 1.5% of our loan amount. The bank fee is negotiated between you and the bank, but the bank’s fees can be financed into the project cost.
How long does the process take?
Once a complete package is provided and approved by the lender, we typically have your loan ready for submission to the SBA within five business days. We typically recommend at least a 45-60 day escrow to allow for sufficient time for bank and SBA approval along with third party reports; however, it can be done in less time.
When does my loan with you fund?
We will partner with a bank to provide your financing. Our lending partner will fund a bridge loan for up to 40% of the project. Once your project is completed, we will then fund up to 40% and pay off your bridge loan, creating your permanent loan for 20 years with a 20 year amortization and fixed rate.
What types of properties does the SBA consider single purpose?
All other properties are considered to be multi-purpose.
When is my rate determined?
Your loan rate is determined once your loan closes with us and has funded. The funding date is separate from the closing date and occurs once a month. Contact us for this year’s monthly funding dates, but it will typically occur the first Tuesday of each month and sale occurs toward the middle of the month. Once the rate is determined, our servicing department will be in contact with you to let you know what the current rate is, discuss your monthly payments, and discuss the timing for receipt of your fee refund.
How is the SBA's interest rate calculated?
- SBA Guaranty Fee (0.5%)
- Underwriting Fee (0.4%)
- Funding Fee (0.25%)
- CDC Processing Fee (1.5%)
- Eligible Closing Costs
What are other costs I might incur when getting a loan?
Is there a prepayment penalty on the SBA’s portion?
Yes. the 20 year debenture loan requires a 10 year prepayment penalty. The amount of the penalty depends on the debenture rate assigned to the loan. For instance, if the debenture rate for your loan is 2.5%, it would decline 10% every year for 10 years (e.g., at year 5 it would be 1.25%). After 10 years there will be no prepayment penalty.