The SBA 504 program is a great deal for borrowers. But like any federal program, it can be complicated. That’s why Self-Help is here: with more than 20 years of expertise with the SBA 504 program, we’ll take care of all the SBA paperwork, and we handle all underwriting, closing and servicing of the SBA portion of the loan.
When you have a perspective 504 borrower, get in touch with us early – we’ll make the process as fast, easy and hassle-free as possible for you and your borrower.
Though every 504 loan is different, there are some common pitfalls that can slow the process down. Take a look at the tips below to make your 504 loan experience as smooth as possible.
And of course, you can always get in in touch with our 504 team with any questions.
Self-Help’s Tips for SBA 504 Lenders:
- Involve Self-Help as early as possible, so that we can conduct our underwriting process in parallel with yours. If we do not begin underwriting until after bank approval, it can cause significant delays while we wait for SBA approval.
- Share your underwriting information – credit memo, business narrative, borrower financials, etc. – with Self-Help during underwriting. This keeps us from going back to the borrower for redundant information, speeds the process significantly and creates a smoother process for the borrower.
- Address the appraisal to your bank, the SBA and Self-Help Ventures Fund. Include both “Self-Help Ventures Fund” and the SBA as intended users.
- The SBA has complex requirements for the environmental report. Contact Self-Help as early as possible to discuss environmental requirements so that we can help ensure SBA approval of the environmental investigation. Please contact Self-Help to obtain the Reliance Letter that the environmental consultant will need to provide to Self-Help and the SBA.
- Alert Self-Help when you request property and title insurance from the borrower, so that we can secure insurance for the permanent loan, interim loan and Self-Help/SBA loan simultaneously.
- Many elements of the loan package must be pre-cleared before SBA approval can happen. Involve us early so that we can help you handle potential roadblocks like franchise agreements, complications with the Statement of Personal History, green-card verification and more.
- Make sure all loan disbursements are for eligible project costs.
- To complete SBA closing, Self-Help will need detailed documentation related to all interim loan expenditures, including change orders, construction draws, proof of paid invoices and contingency disbursements.
- Track project costs and all draw requests throughout construction and submit them to Self-Help as early as possible.
- Be aware of the SBA’s rules about the first-mortgage loan documents: they cannot include cross-collateralization, early call provisions, cross-default provisions or future advance clauses.
- Self-Help will coordinate closing with you. Make sure to tell us as soon as possible about any last-minute project changes.
- Be aware that the SBA 504 loan cannot close until construction is completed (whether new construction or renovation).