More on B & I Loans

As the SBA is becoming more aggressive to the ultimate borrower the USDA is also making plans for concessions to borrowers as well. Remember the demographic size limitation, not all properties will qualify for a USDA B&I loan.

* USDA like SBA will likely have some 90% guarantees in its stimulus funds
* USDA like SBA will likely pay some borrower fees and may reduce some borrower fee to 1% (from 2%)
* USDA will publish its stimulus rules for lenders to follow by June 1, 2009
* USDA stimulus funds will be delegated to the state for local approval.

To get the biggest bang for the buck and get the stimulus dollars flowing, the USDA B&I may give lenders the loan guarantee during construction as SBA does.   Know that many Banks considers these loans with 20% down for a 30-yr. term (no balloon).

I asked a lender today if B & I limits the goodwill in the purchase price of a business to $250,000 as the SBA is now doing. His response is below.

No word on limiting goodwill as an acceptable use of proceeds. USDA requires that the goodwill proceeds be fully secured, with discounted real estate. So if the subject property’s not enough, the buyer would need to pledge additional collateral. In the case of a refinance, if the LTV is adequate, it’s possible to give working capital as a use of proceeds because it’s supported with property.

For more on commercial and SBA Loans visit our site, and should you decide to get a loan on your own make sure you download our book GET Your Loan Closed!

PS for those that want a primer on commercial and business loans our book is a great tool.