SBA loans: How to issue your 504 loan commitment for permanent and interim financing, collection of due diligence and the loan closing process.

1. 504 Packaging Tips-
Closing Your Loan to
Ensure Perfect
Packaging
Alison W. Rind
Lerch, Early & Brewer, Chtd.
www.lerchearly.com August 2, 2012

2. Overview
Issuing Your Loan Commitment For
Permanent and Interim Financing
Collection of Due Diligence
Closing Process
 Simultaneous Closing
 Closing After Disbursement
2
Completion
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3. Loan Commitment
 Make sure Permanent and
Interim Loans Match SBA/CDC
Approval
 Request Copy of Authorization
 Loan Fees
 InterimLoan Fee – Eligible Project Cost
 Third Party Lender Fee
 Borrower and Guarantor
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4. Commitment Letter (continued)
 Collateral
 Preference Issues
 Interim Loan Security
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5. Loan Commitment (continued)
 Make sure interim loan term is
sufficient for debenture funding
 If simultaneous closing, allow at least 3
months
 If disbursements are anticipated for 6
months, then term should be at least 9
months
 Interim term is defined as the sooner of
5
term in months or funding of debenture
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6. Checklist
 Include Documentation Required
for Permanent/Interim Loan
Closing and CDC Closing
 Organizational Documents
 TitleWork
 Appraisal
 Environmental
 Sales Contract
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7. Checklist (continued)
 Lien Searches
 Insurance
 SBA Approvals
 Leases
 Loan Documents
 Financial Statements
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8. Checklist (continued)
 Copy CDC/CDC Counsel on All
Due Diligence Items Received
 Request Property Insurance and
Title Insurance for permanent
loan, interim loan and CDC loan
simultaneously
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9. Parties
 Lender
 Lender’s Counsel
 Borrower
 Borrower’s Counsel
 Title Company
 CDC
 CDC Counsel
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10. Simultaneous Closing
 Real Property Purchase (no
construction)
 Refinance
 Equipment Purchase
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11. Simultaneous Closing
 Provide draft loan documents to CDC
counsel
 Execute Third Party Lender
Agreement and Interim Lender
Certificate
 Pay Third Party Lender Fee
 Provide Wiring Information to CDC
for wire of debenture
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12. Construction
 Contracts
 Disbursement Requests
 Lien Waivers
 Final Certificate of Occupancy
 Updated Appraisal
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13. Modifications
 Remember, both the permanent and
interim loan amounts must be modified.
 Borrower will also be required to inject
more equity to maintain the 50-40-10
balance.
 Submit to the CDC documentation to
justify the increase of Project Costs and
obtain a revised appraisal, if needed, to
support the increased costs.
 Extension of Interim term may be required
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14. Speakers
 Alison W. Rind is an attorney at
Lerch, Early & Brewer who
(301) 657-0750 represents commercial lenders in
awrind@
lerchearly.com
loan transactions and other
commercial matters. These include
participants in SBA and other
government-guaranteed lending
( programs.
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15. For more information
Lerch, Early & Brewer, Chtd.
3 Bethesda Metro Center, Suite 460
Bethesda, MD 20814
(301) 986-1300
www.lerchearly.com
Thank you for your participation
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