SBA 504 Packaging Issues and Tips Lerch Early at America East

504 Packaging Tips-
Closing Your Loan to
Ensure Perfect
Packaging

Alison W. Rind
Lerch, Early & Brewer, Chtd.
www.lerchearly.com August 2, 2012

Overview
Issuing Your Loan Commitment For
Permanent and Interim Financing
Collection of Due Diligence
Closing Process
 Simultaneous Closing
 Closing After Disbursement
2
Completion
© Lerch, Early & Brewer, Chtd. 2012 www.lerchearly.com

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

Commitment Letter (continued)

 Collateral
 Preference Issues
 Interim Loan Security


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

Checklist

 Include Documentation Required
for Permanent/Interim Loan
Closing and CDC Closing
 Organizational Documents
 TitleWork
 Appraisal
 Environmental
 Sales Contract

Checklist (continued)

 Lien Searches
 Insurance
 SBA Approvals
 Leases
 Loan Documents
 Financial Statements

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


Parties

 Lender
 Lender’s Counsel
 Borrower
 Borrower’s Counsel
 Title Company
 CDC
 CDC Counsel

Simultaneous Closing

 Real Property Purchase (no
construction)
 Refinance
 Equipment Purchase


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

Construction

 Contracts
 Disbursement Requests
 Lien Waivers
 Final Certificate of Occupancy
 Updated Appraisal


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

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.


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


SBA 504 Packaging Issues and Tips Lerch Early at America East

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SBA 504 Packaging Issues and Tips Lerch Early at America East