The closing process for a SBA 504 Loan is as follows:
Step 1: The terms of the SBA Authorization are reviewed in detail. The borrower and participating private lender are given a closing checklist. Timelines relating to the gathering of necessary documentation are established. A closing date is determined in most instances.
Step 2: The bank closes its permanent and interim loans which result in the borrower acquiring title to the project assets. Once the bank has closed its loans, copies of its loan documentation and title work are provided to BFC. The balance of the bank’s checklist items are supplied to BFC. The balance of the borrower’s checklist items are to be supplied as well.
Step 3: Once BFC has received all of the checklist documents from the bank and the borrower, a final closing date is established.
Step 4: The SBA 504 loan is closed. Loan funds are not available to this point.
Step 5: BFC’s Attorney reviews the executed loan document and issues a legal opinion on which SBA relies.
Step 6: The loan file and legal opinion are forwarded to SBA’s legal division for final review. SBA completes its legal review of the executed loan documents and legal opinion provided by BFC’s Attorney.
Step 7: SBA forwards appropriate documentation to the Federal government in Washington D.C. to effectuate the sale of the 504 debenture. Shortly thereafter the 504 loan is priced and funded.
Step 8: The loan proceeds are wire transferred to the participating bank to pay down its interim loan. The loan transaction is complete at this point.
Typically, 45 days will expire from the time that BFC receives all of the closing checklist items to the sale of the 504 debenture and funding of the 504 loan.