Leases. If the Borrower is different than the Operating Company, there must be a lease between the Borrower and the Operating Company for 100% of the Project Property. If there is a subtenant, the sublease must be between the Operating Company and the subtenant. When the borrowers are a husband and wife, and the business is operated/owned by one spouse, a lease is not required.
Subordination Agreements Every lease and sublease on the Project Property are to be made subordinate, or junior, to the SBA Deed of Trust. The Borrower and the Operating Company must sign the Subordination Agreement, which relates to their lease. The Operating Company and the subtenant must sign the Subordination Agreement, which relates to their lease. Each signature must be notarized. CDCs can provide borrowers with copies of this agreement.
So long as the subtenant is not in default of their lease, their tenancy should not be disturbed or interrupted.

The Operating Company must occupy the Project Property during the term of the loan (51% if existing building; more if new construction). The Operating Company must occupy the Project Property by the closing of the loan. In limited, pre-approved situations, occupancy may occur after closing with prior approval by the SBA.

The Borrowers contribution must be completed prior to closing. Proof of the contribution must be provided.

Corporate Officers Every corporation must have a President, Secretary and Treasurer. These positions may be filled by one person or by multiple people. Corporate officers must be elected on an annual basis. Proof of their election within the last 12 months is required. CDC Small Business Finance can assist with a sample resolution for corporate officers.

Corporate Directors. If a corporation has one shareholder, at least one director is required. If a corporation has two shareholders, at least two directors are required. If a corporation has three or more shareholders, at least three directors are required. Corporate directors must be elected on an annual basis. Proof of their election within the last 12 months is required.

W-9 An IRS Form W-9 must be completed and submitted with every package. Relevant tax reporting information will be reported by the Central Servicing Agent to the person or entity identified on this Form. The Borrower must select one person or entity and insert all applicable information.

Hazard insurance on the Project Property must be obtained prior to closing and must be current. The amount should be full replacement cost and must obtain a mortgagee clause in favor of the SBA and the CDC. The policy must provide for 10 days notice prior to cancellation.

Financial Statements current to within 90 days of the closing process are required from the Operating Company.

In projects involving construction, the Borrower must provide a (1) Certificate of Occupancy or Final Inspection at approval, (2) a notice of completion of the work, and (3) proof of construction expenditures. Your CDC loan officer and loan package can provide assistance in this regard.

Normal bank costs as follows:

  • Interim Points/ Loan Fees
  • Documentation Fees
  • Processing Fees
  • Appraisal
  • Environmental Report
  • Title Fees
  • CDC Counsel Fee
  • Submit a completed application(PDF) and all supporting documentation
  • The loan officer will review your application and call to discuss your financial needs.
  • The loan officer will determine if your loan request should be presented to board approval
  • The loan package is submitted to board for approval
  • The completed loan package is submitted to SBA for approval
  • Once SBA approves the loan, the closing process is prepared.
  • Closing
  • 504 Funding
  • Completed and signed application
  • Three years of personal tax returns
  • Three years of business tax returns (for existing businesses)
  • Interim Statement dated within 30 days
  • Business plan for all start-ups
  • Financial projections
  • Copy of draft lease(if applicable)
  • Evidence of owner(s) contribution to the project
  • Copy of operating agreement for all corporations, LLCs & LLPs
  • Evidence that the business is current on all state and payroll taxes

We can help a business refinance its debt in order to reduce current interest rates and/or convert from a floating rate to a fixed rate, reduce monthly payments by extending the loan maturity, convert short-term debt to long-term debt, or use the equity that’s built up in fixed assets to provide cash for the growth of the business.

Yes. In addition, the ownership in the real estate does not have to be the same as the ownership but a guarantee by the business and the property owners will be required. In addition, the buyer/borrower does not have to have any ownership in the business, but the business and any 20% owner of the business must be a guarantor on the SBA loan.

Financial Statements current to within 90 days of the closing process are required from the Operating Company and all affiliates companies.