CURRENT 504 LOAN RATES
6.20% fixed for 20 years for real estate projects, including acquisition, new construction and major renovation
6.30% fixed for 10 years for heavy-duty equipment and machinery
(as of March 6, 2007)
Rates continued to trend down this month, as the program surpassed the
$30-billion debentures mark. It took about two and a half years to go
from $20 billion to $30 billion compared to more than five years to get
from $10 billion to $20 billion and nearly 13 years to break the $10
billion mark. Congratulations to all of our lending partners who
contributed to this growth. |
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504 UNDERWRITING TIP: DEALING WITH APPRAISALS AND ENVIRONMENTALS
All of our lending partners do a very thorough job of reviewing the environmental reports and appraisals they commission on 504 projects.
However, we have to look at them, too - and also make sure they pass muster with the SBA.
In many cases, these reports contain information that could cause the SBA to reject the report, or at least ask for additional information, if we have not had a chance to review the report carefully.
We've attached a list we received from the SBA of the major reasons why they end up screening out appraisals and environmental reports. The list indicates the sort of information we need to investigate in these reports.
To guard against problematic reports, we have several suggestions:
- Get these reports to us as quickly as possible. We understand SBA requirements, and can give you quick feedback on any concerns.
- Ask us to give you a quick upfront read on the reports: Will there be issues with Sacramento? Are there ways to address them before sending them in for review?
- Hold off on closing until the CDC has SBA approval on both reports (for PCLP CDCs, until they have approved the reports internally). That way you can avoid any surprises that may come out of the review of these documents.
Appraisals in particular can create complications for your projects. The appraisal analysis is not simply a matter of ensuring the property has the appropriate value. We must also review the appraisal carefully to ensure there is no information that would require a change in the project financing structure.
Similarly, SBA now requires Phase I investigations to be "AAI-compliant." It is important for us to verify that the report addresses ASTM 1527-05 standards, or the SBA will require that the report be redone.
In the near future, we anticipate that these standards will change even further. The SBA has been working on an updated Notice on Appraisal Standards for many months, and is also updating environmental standards. Each of these documents will affect prevailing standards, and thus you'll need to rely on us to help you understand how best to comply with these changed standards.
Though these standards might sound a little tough, they're all part of our job to ensure we comply with SBA project regulations. If you work closely with us, we can address these issues promptly and effectively, and move your projects along with minimal complications.
If you'd like to see our detailed guidelines on CDC standards for lenders on appraisals and environmental reviews, please e-mail jim.overton@self-help.org. |
BORROWER SUCCESS STORY:
TEXACO "XPRESS" LUBE OF ELIZABETH CITY
Owner: Robert "Bob" and Roberta Symuleski
Lending Partner: Wachovia Commercial Mortgage
Location: Elizabeth City, Pasquotank County
Project: Land purchase and building construction
Community Impact: Veteran-owned, rural area, five jobs created
Retired 30-year Navy veteran Bob Symuleski partnered with his wife, Roberta, in 2002 to open a new Texaco Xpress Lube shop in Elizabeth City, which has a population of less than 20,000. Off State Highway 17 Business, the shop serves northeastern North Carolina, especially Pasquotank County, the area's economic focal point.
The wife-husband team says that the SBA 504 loan was instrumental and absolutely necessary in helping get their business off the ground.
"When I came down here after having served for 30 years in the Navy, I walked into the bank, talked to Ben Rinehart (WB Commercial Mortgage) and he called Gerry Blood (Self-Help) to set up an appointment," explained Bob. "Three days later we met, I showed them our business plan and they said they could help us out. It was a very enjoyable experience! The paperwork wasn't a hassle because Gerry got our lawyer to get going and help expedite the process and we didn't run into any problems. It was easy!"
Bob and Roberta both brought solid management experience to the business. During his last year as a Navy officer, Bob worked part time at a quick lube shop in order to learn the business and worked with a start-up Xpress Lube in Chesapeake, Va. Prior to helping start up the Xpress Lube, Roberta spent five years as an inventory manager for two companies.
Texaco Xpress Lube has experienced extraordinary growth since opening its doors, tripling its business.
"We started out with only four employees and now and we're up to eight," said Bob. "In our first year we serviced between 23 and 25 cars a day, and now we're handling 65 per day! I'm real pleased with what's going on here."
Bob and Roberta don't plan to stop here. They're considering signing a lease to open up a second shop that is about six miles from the current shop. Their goal is to capture business within a 10-mile ring of the current location, and they may set up another shop in the vicinity in another five years.
"Gerry was instrumental in getting us through the SBA 504 loan process," recalls Bob. "Anytime we had a question, he was always there for us. He made the process as simple as you can possibly get it. Our experience has been unbelievable and I'm really pleased."
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TOP 7 REASONS FOR APPRAISAL SCREEN-OUT
1. Appraisal address does not match the Authorization address.
2. The
appraisal indicates the property is "'special use" - but the
Authorization does not reflect required additional five-percent equity
injection.
3. The
appraisal indicates the borrower is purchasing two separate parcels;
however, the business will use only one parcel. The excess parcel is
not an eligible cost. 4. The appraisal indicates the borrower is paying a different price for the property than is reflected in the authorization.
5. The
appraisal doesn't provide the needed final valuation. For example, the
appraisal provides an "as- is" value only - even though the budget
includes significant building improvements.
6. The
appraisal indicates the borrower is receiving a seller's credit, but it
is not reflected in the costs in the authorization.
7. The property history indicates that the purchase is not an arms-length transaction. |
TOP 4 REASONS FOR ENVIORNMENTAL
SCREEN-OUTS
1. Address on the environmental investigation doesn't match the address on the Authorization.
2. Owner of the property does not sign and date an environmental questionnaire.
3. The environmental questionnaire is not fully completed.
4. CDC does not provide comments on the "CDC Checklist for Submitting an Environmental Investigation."
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SBA ONLINE TRAINING: A USEFUL TOOL FOR A START-UP CLIENTS
The N.C. SBA District Office offers SBA Programs and Services Training sessions every Friday from 9 to 10 a.m. and 12:30 to 1:30 p.m. SBA district employees provide the live training through "Ready Talk" software. Your clients can call and sign into the website for a live PowerPoint presentation covering topics like SBA loan programs, counseling and government contracting. In addition to helping out your start-up clients, these sessions can also serve as refresher courses for you and your colleagues.
Visit www.sba.gov/nc/trainonline.html to register and for more information. |
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| LENDERS SPOTLIGHT: SELF-HELP FEB. 2007 SBA 504 APPROVALS |
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Thank you for making February a strong month! In addition to the SBA approval below, Self-Help's 504 Credit Committee internally approved six projects.
LENDER LOCATION INDUSTRY PROJECT COST
Bank of America Wake Forest Auto oil change & lube shop $530,000 |
CONTACT US
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Call the Self-Help loan officer nearest you to discuss a project or learn more about how you can use an SBA 504 loan to help your small business customers with expansion needs.
Charlotte NC Region: Dale Harrold and Ralph Ansell, Self-Help, Great Aunt Stella Center, 926 Elizabeth Ave., Suite 302, Charlotte, NC 28204 * 800-394-7428
Sandhills NC Region: Allen Cofiori, Self-Help, 100 Hay St., Suite 300, Fayetteville, NC 28301 * 800-774-7966
Northeastern NC Region: Gerry Blood, Self-Help, 301 South Evans St., Suite 306, Greenville, NC 27858 * 800-893-9669
Southeastern NC Region: Louis Rogers, Self-Help, 272 N. Front St., Suite 300, Wilmington, NC 28401 * 877-559-4284
Triad NC Region: Anna Tefft, Self-Help, 122 N. Elm St., Suite 1015, Greensboro, NC 27401 and 500 West Fourth Street, Suite 200, Winston-Salem, NC 27101 * 800-269-7426
Central NC Region: Joe Osowski, Self-Help, 301 W. Main St., P.O. Box 3619, Durham, NC 27702 * 800-476-7428
Western NC Region: Tom Byers, Self-Help, 34 Wall St., Suite 704, Asheville, NC 28801 * 800-229-7428
Contact our SBA 504 Program Director, Jim Overton, at 919-956-4473.
Or contact our SBA 504 Marketing Officer, Jamie Miyares, at 919-956-4670. |
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