Sign your name exactly as it appears on the LA&A. If you entered incorrectly, you must sign with the correct spelling. Form SBA 160, Resolution of the Board of Directors (Used to document that a borrowing company authorized the company to enter into the loan commitment and authorized certain officers to sign the documents necessary to bind the company to the bond.) The «SBA loan name» and «borrower» are usually not the same. According to the SBA loan naming convention, the borrower`s name is the last option for the SBA loan name. If any of the names have changed since the loan was approved, the lender must notify the SBA and document the changes to the authorization. The authorization specifies whether a warranty should be complete or limited. Form SBA 148 is used whenever the guarantor is responsible for repaying the full amount of the borrower`s loan. Form SBA 148L is used whenever the lender intends to limit the scope of the guarantor`s liability. B for example the amount or duration of the guarantee or the limitation of the guarantor`s obligation to the guarantor`s interest in property (real or personal) pledged to guarantee the repayment of the loan. If a warranty is limited, the authorization describes the limitation. These provisions are intended to ensure the quality of the construction and reduce the risk to both the lender and the borrower in the event that the proceeds of the loan provided for the construction are not sufficient to cover the total cost of construction. In general, the lender cannot allow the borrower to act as its own general contractor (OP 50-10(4)(B), Subsection A, Chapter 5, subsection 6(e)(2), page 110).
The person who signed the loan closing documents is designated as the signatory of the loan documents. Pay the loan proceeds only for the purposes specified in the authorization The lender may create its own payment plan provided that all loan proceeds are disbursed within 24 months of the date of approval. With the exception of all express loans, the lender must document loan disbursements on form SBA 1050, statement sheet. This form is signed by the lender and borrower at the time of the lender`s disbursement and must include sufficient detail so that the SBA can determine who received the loan proceeds, when the loan proceeds were disbursed, and in what amount, and most importantly, how the loan proceeds were used. The lender must use a separate guarantee form for each guarantor. This will allow for greater flexibility in developing a loan liquidation plan if necessary in the future. (The lender may have to sue guarantors in different states or try to recover from a guarantor after another guarantor`s liability has been settled in the event of bankruptcy.) The lender must require the borrower to purchase federal flood insurance or other appropriate risk insurance if FEMA (Form 81-93) indicates that any portion of the title, including personal property, is or will be in a special flood risk area. The amount of flood insurance must be the lower value of the insurable value of the property or the maximum coverage limit available, and the policy must include a MORTGAGE CLAUSE/PAYABLE LENDER LOSS CLAUSE (or equivalent) in favor of the lender.
Borrowers who do not maintain the required flood insurance for the term of the loan are not eligible for future support from the SBA. The only exception is when flood insurance, which is required for the safety of personal property, cannot be purchased or is prohibitively expensive. In such cases, the lender must request the waiver in writing from the SBA and explain the circumstances. MISUSE OF LOAN FUNDS: Any person who improperly applies the loan proceeds will be civilly liable to the SBA for one and a half times the proceeds disbursed, in addition to other remedies permitted by law. No obligation is required if the proceeds of the loan guaranteed by the SBA are used only to refinance the interim construction debt and if the SBA does not guarantee this interim debt – sometimes referred to as «takeout» financing. In this case, it is not necessary to protect oneself through a bond, as the risk is «assumed» by the interim lender and the SBA funds are only involved once construction is complete. The authorization provides for additional certifications of the borrower and the operating company in terms of capital assets, location restrictions and salary and occupancy. Restrictions on the acquisition of capital assets, new locations, and withdrawals and salaries are only imposed if necessary to protect the SBA. Certificates of occupancy are required when the proceeds of the loan are used to purchase or renovate an existing building or construct a new building. The general requirements that a lender must meet for SBA to guarantee 7(a) loans are described in part in Form SBA 750, Guarantee Agreement. The authorization contains specific requirements for each 7(a) loan.
Lenders are expected to close 7(a) loans in the same way they take out non-SBA loans. Lenders are responsible for knowing how to properly close loans, secure collateral, obtain and perfect necessary privileges, and meet other approval requirements. SBA requires 100% payment and performance guarantee, as well as builder`s risk insurance for all 7(a) loans that use more than $125,000 in SBA-backed product to directly finance construction. This is to ensure that the construction is completed if the contractor does not do so. For loans with a maturity of more than 12 months, the guarantee fee is due to the SBA within 90 days of the date of approval of the loan. For loans with a term of 12 months or less, the lender must pay this fee at the time of application. SBA does not extend or waive the due date for payment of the warranty fee. If the fee is not received within the required time, the warranty will be void. The buyer`s customers must guarantee the loan; and this agreement includes access to the franchisor`s books, a 30-day notice to the lender of the intention to terminate the franchise agreement that gives the lender the opportunity to heal, and the deferral of payments of the franchise fee if the loan defaults.
If these requirements cannot be met, they may be waived if there are minimal credit effects, if these agreements are not in place. In order for the public and your employees to be aware of their rights under 13 C.F.R Parts 112, 113 and 117, Small Business Administration Regulations, and to comply with the instructions of the SBA Administrator, this sign must be placed where it is clearly visible to employees, job applicants and the public. Name of the company or name of the applicant, as indicated on the loan application. Often, lenders will want to limit the borrower`s ability to pay their other creditors while loan 7(a) is pending to save cash flow. In these cases, the lender may use Form SBA 155, Reserve Creditor Agreement, to exercise control over the borrower`s ability to pay its other creditors. When using the SBA 155 form, the lender should keep five important points in mind: If the loan is structured as an EPC/OC loan when using the wizard, check the box in the wizard that indicates that the borrower is an EPC. (If the CO is only reported as a co-borrower, the authorization does not include the allocation of rents required for EPC/OC loans in the Guarantee section and does not refer to the requirements that apply to both borrowers and CO in the rest of the authorization.) SBA does not require a separate loan agreement to be signed by the borrower. If it is the lender`s habit to require a loan agreement, it can do so.
The lender may use its own form of loan agreement or the sample SBA form in Appendix D of the standard. To simplify things, an LLC certificate is a document signed by all members of a limited liability company or LLC to show that they have formally met to discuss an issue regarding their LLC and reach an agreement. All companies that applied for a Covid-19 EIDL loan from the SBA had to apply for the EIDL loan through the SBA website. Next, one of the business owners had to create an SBA online portal account to check the status of their EIDL loan application and, most importantly, electronically sign the approved loan agreement documents to deposit the funds into your business bank account. Make sure that the initial payment is significantly higher than the amount required to cover the warranty fee. A payment cannot be made solely to recover the warranty fee. It must be part of another disbursement for other loan purposes. Form SBA 155 does not impose any security of the custodial creditor in the same collateral that was pledged to secure the repayment of the SBA loan. This objective must be achieved by a separate subordination agreement. Covers coverage of 80% of the insurable value of the business content (excluding land or buildings). Details of the business items identified as collateral can be found in your loan approval and contract documents.
EIDL documents require that a resolution of the Board of Directors be submitted within 6 months of the disbursement of the loan. Proof of risk insurance is due within 1 year of the disbursement of the loan. READ THE NOTE CAREFULLY: This is your promise to repay the loan. If the 7(a) loan is not used for the mortgage, the lender still has certain documentation requirements. Either before closing loan 7(a) or at closing, the lender must prove that several conditions have been met. These conditions include: that the construction was essentially completed: the project was paid for in full: and that there is no unpaid labor or material privileges (such as the privilege of a mechanic). Other conditions are listed in the permit under the heading «Mortgage without SBA guarantee». Variable interest rate loans – enter «variable rate» or «P+2%» when a suffix appears in the signature line, e.B sr. . . .