Many small businesses are acquired with the assistance of SBA Financing; and specifically, an SBA 7(a) Loan. SBA 7(a) loans can be used for short and long-term working capital, refinancing current business debt and asset acquisitions (purchase of furniture, fixtures, equipment and inventory).
There are very specific eligibility requirements that must be met in order to obtain an SBA loan—including such items as being considered a “small business” by the SBA and using the loan proceeds in a particular manner. Additionally, the underwriting and approval process requires a borrower to:
- Complete certain SBA forms
- Provide personal financial statements and tax returns
- Submit financial information (balance sheet, profit and loss statements, and tax returns) for the business being purchased
- Deliver a host of other documentation
As the lender moves through the loan underwriting process, the bank will generate a closing checklist with a list of outstanding items that must be submitted in order for the bank to clear the loan for closing. The closing checklist includes items such as copies of corporate documents, title commitment (when real estate is being purchased), lien and judgment searches, tax clearances, a lease agreement, certificates of insurance, Purchase Agreements, Bill of Sale, Landlord Waiver, Certificates of Good Standing, Appraisal, and Attorney Opinion Letter.
As anyone can imagine, the entire undertaking can be very daunting for any borrower.
Work With an Attorney to Navigate the SBA Loan Process
We strive to take the stress out of the SBA process by being the “quarterback” of the closing checklist. This entails us having regular calls with the bank and our client to make sure documents are being provided by each responsible party in a timely manner so that the checklist can be completed and the loan closed. We also take the lead on drafting or reviewing all pertinent transaction-related documents such as the Bill of Sale, Operating Agreements, Closing Certificates, and Opinion Letters. Our job is to act as the liaison between our client and the bank, the bank’s attorney and other necessary third-parties.
Finally, we review the bank’s entire loan package with our client prior to closing to ensure that the terms of the Note, Mortgage, Security Agreement and other loan documents align with the bank’s commitment letter and our client’s expectation of the loan terms.
Ready to get some help navigating SBA financing? Contact us today for more information.