SBA 504 Packaging Issues and Tips Lerch Early at America East

504 Packaging Tips-

Closing Your Loan to

Ensure Perfect

Packaging

August 2, 2012

Alison W. Rind

Lerch, Early & Brewer, Chtd.

www.lerchearly.com

© Lerch, Early & Brewer, Chtd. 2012 www.lerchearly.com

Issuing Your Loan Commitment For

Permanent and Interim Financing

Collection of Due Diligence

Closing Process

Simultaneous Closing

Closing After Disbursement

Completion

Overview

2


Loan Commitment

Make sure Permanent and

Interim Loans Match SBA/CDC

ApprovalRequest Copy of Authorization

Loan FeesInterim Loan Fee – Eligible Project Cost

Third Party Lender Fee

Borrower and Guarantor3


Commitment Letter (continued)

CollateralPreference Issues

Interim Loan Security

4


Loan Commitment (continued)

Make sure interim loan term is

sufficient for debenture fundingIf 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

term in months or funding of debenture5


Checklist

Include Documentation Required

for Permanent/Interim Loan

Closing and CDC ClosingOrganizational Documents

Title Work

Appraisal

Environmental

Sales Contract6


Checklist (continued)

Lien Searches

Insurance

SBA Approvals

Leases

Loan Documents

Financial Statements

7


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

8


Parties

Lender

Lender’s Counsel

Borrower

Borrower’s Counsel

Title Company

CDC

CDC Counsel9



Real Property Purchase (no

construction)

Refinance

Equipment Purchase

10



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 debenture11


Construction

Contracts

Disbursement Requests

Lien Waivers

Final Certificate of Occupancy

Updated Appraisal

12


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 required13


Speakers

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Alison W. Rind is an attorney at

Lerch, Early & Brewer who

represents commercial lenders in

loan transactions and other

commercial matters. These include

participants in SBA and other

government-guaranteed lending

programs.

(301) 657-0750

awrind@

lerchearly.com

(


For more information

15

Lerch, Early & Brewer, Chtd.

3 Bethesda Metro Center, Suite 460

Bethesda, MD 20814

(301) 986-1300

www.lerchearly.com

Thank you for your participation

SBA 504 Packaging Issues and Tips Lerch Early at America East

Business

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