Business is AGAIN Booming!
Its been a while since I posted but rather than tell you how busy we are with lots of SBA and Commercial Real Estate Loans I want to give you an update on the new SBA Changes that will become effective October 1, 2009
So here’s the content of an email I sent my colleagues and clients.
Dear Clients and Friends,
RE: IMPORTANT CHANGES from SBA:
The following are changes that will become effective October 1, 2009 with the inception of the new SBA SOP 10 5B. Like all changes and programs that we have seen from the SBA this year there is no guarantee that the lenders are going to “buy” into all of these new changes. Certain policies will have to be accepted by the lending community but others such as the new fixed rate are an option for the lending community to accept or reject based on their own internal analysis.
Like the ARC and the Patriot Express there are also no guarantees that the individual lenders will even offer the options suggested by the SBA.
1. There is a new Fixed Interest Rate option in addition to the two variable options already in place. (More information will be available on the floor rate and maximum rate) Rates will be published in the Federal Register.
2. Intangible Assets or Good Will – Up to $500,000 of intangible assets the lending community now once again has final approval, there is no need to go to the SBA for an exception. If the intangibles exceed $500,000 and there is a combination of borrower injection and seller financing equal to 25% of the purchase price there is no need to apply for an exception. If there is less than 25% of the purchase price an exception will be needed for final approval by the SBA. Note -Seller financing will have to be a complete standby for two years with no payments.
3. Refinancing of an existing Seller Note cannot take place for a full two years from the date of “change of ownership”.
4. Refinancing of Credit Card debt must now be applicant certified that the debt was solely used for business purposes.
5. Business Character Determination – New Requirement – The lender must review the character of the operating company as well as the owners. The lender must also identify in its credit write-up any Federal, State or Local citations or probations that might affect the ability of the business to continue operations.
6. Master Franchise Agreements are now Ineligible to be financed as they are considered passive investments. Area Development Rights are not as they are associated with an actual operation of a franchise.
These are the important changes that you should be aware of. There are many other changes in the SOP, but I wanted to get this e-mail out so I only chose to discuss the changes that are extremely relevant to you. These changes are highlights from the National Association of Guaranteed government Lenders website.
Other Information:
There has been a great deal of publicity and controversy being discussed and reviewed about the ARC program. Many Legislators are up in arms about the lack of funding by the lending community.
To date there still is no lender that has agreed to lend on the SBA Flooring Program – we will keep you updated when and if the first flooring deal occurs.
Patriot Express Loan – There are some lenders that are offering this exciting program but they are underwriting it as a normal SBA Express or 7A Loan.
On a Company basis we are getting loan approvals and closings. We just closed a 2.0M refinance of an assisted living care facility, as well as a 1.4M M&A acquisition with real estate, approval of a construction of a new car wash for 2.0M, approval of a company relocating from GA to buy a new Commercial Building for 1.4M, and most recently approval of a restaurant expanding to an additional facility.
If we can be of any service to you to address any questions on the new SBA Programs or pre-qualify any of your transactions please contact us at loanforbiz.com
