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The SBA 504 Loan approval process begins with a meeting between the borrower and a CMDC loan officer to discuss the parameters of the project. CMDC staff will provide a complete list of documentation that is needed to complete an application.
Following the initial interview the borrower submits all application materials to CMDC staff along with original signatures on each application item.
After receipt of all application items, CMDC staff completes its underwriting and review process and presents the loan request to the CMDC Board of Directors for loan approval. Loan approval is typically provided within one to two weeks following receipt of a complete application package.
Loans that have received CMDC Board approval are submitted to SBA's central processing center for final SBA approval. If approved by SBA, a written "loan authorization" is issued outlining the terms and conditions for loan approval. CMDC staff will meet with the borrower to review the Authorization in detail and obtain written acceptance of the Authorization from the borrower.
After meeting with the borrower, CMDC staff will provide a copy of the signed Authorization to the First Mortgage Lender. The lender will arrange a closing with the borrower and provide interim financing for the project in an amount equal to the first mortgage and the SBA 504 loan. The interim financing will be in place until the SBA 504 loan from CMDC closes and funds.
CMDC staff will schedule a closing with the borrower following the completion of all project construction or after the assets have been acquired in situations that involve equipment and/or the purchase of an existing building. The borrower will be responsible for all closing costs and other related expenses including but not limited to filing fees, the costs of recording documents, title and hazard insurance premiums and other items identified in the written "Authorization". It is important to note that all borrowers are advised to have their own independent legal counsel at the CMDC loan closing. A legal opinion will be required from the borrower's legal counsel stating that all borrowing entities associated with the loan transaction are legally organized and have the authority to guarantee and borrow funds from CMDC and the Small Business Administration.
CMDC/SBA funding normally occurs approximately 45-60 days following loan closing. Funds are wire transferred directly to the first mortgage lender reducing the interim loan amount to the agreed upon first mortgage loan amount. The interim loan is then converted by the first mortgage lender to a permanent loan. The rate on the CMDC/SBA 504 loan is established at the time of funding and is subject to market conditions in place at that time. The first SBA 504 loan payment is collected by automatic debit to the borrower's account on the first day of the following month after loan funding.