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Can the borrower make early payments?
No, because the SBA 504 program is not designed to accept them. This is a restriction of the SBA 504 note.
Can the borrower pay more on principal than the amortization schedule requests?
No, the SBA 504 program is not designed to accept early payments due to the structure of debentures that fund the loan. We recommend that the borrower accelerate payments on their first mortgage (typically, the first has a higher interest rate and is more expensive).
What is the balance on loan?
Any questions regarding payments, loan balances, interest rates, and general loan servicing questions will be answered by the friendly voice on 303-861-4100.
Will Preferred Lending Partners accept monthly checks or other payments sent to them?
No, all payments are to be made to the SBA processing agent, Colson Services. These payments must either be wire transfers from the borrower’s bank or through a pre-established Authorization Agreement for automatic payment.
Are SBA loans assumable?
Yes, by a new borrower qualified to repay the remaining note. At the present time, the new borrower does not have to meet the SBA eligibility requirements.
Does a borrower have a prepayment premium if the loan paid off before the end of the agreement?
Yes, if the loan is 10 years old or less. No, if the loan is over ten years.
Can a portion of the collateral be released early?
Yes, but each loan requires an individual evaluation and SBA approval before the release can occur. Each case is unique and needs to be discussed with Preferred before a decision can be made.
Can a guarantor on the note be released from their obligation?
It is very unlikely, unless there is a clear supporting case for the change. The borrower should contact Preferred to discuss.
Will the SBA servicing agent, Colson Services, reprocess payments if the first payment submission is rejected because of insufficient funds?
No, however, Colson will contact Preferred who will then contact the borrower to request a wire transfer to cover the delinquent payment and the associated late fees.
Can a payment due date be changed?
No.
Will Preferred Lending Partners subordinate to a new first lender?
Yes, for better terms or other benefit for the borrower’s business, however, it is unlikely that Preferred would subordinate to a larger first mortgage if the new debt is outside the original loan balance.
Will Preferred Lending Partners subordinate to a first lender if there is an increase in the first loan?
The proposal would need to be reviewed by Preferred Lending Partners and the SBA. The additional funds must be applied for the improvement or expansion of the property. In addition, if the borrower has not exceeded the SBA 504-program limit of $2M there may be additional SBA 504 funds available for distribution.
What is the interest rate this month?
Please call for current rate.
What does the borrower have to provide Preferred Lending Partners after the loan is funded?
The borrower is required to provide updated financial statements to Preferred. They are also required to insure insurance on the building is current and the property taxes are current.
How does a borrower get the "annual" interest "paid" on the loan?
Interest statements are sent out from
both Preferred Lending Partners and Colson Services by early February to the loaned property. If you do not receive a statement by late February, please call (303)861-4100.
Can a borrower refinance an existing SBA 504 loan to take advantage of improved rates?
No.
In the event of a cost overrun incurred on a project during its construction phase, how may the additional costs be addressed for permanent financing?
The borrower should contact both the primary lender and Preferred to discuss the change in condition. Since the authorization was based on a specific project costs Preferred in conjunction with SBA to determine the impact on the original loan commitment. The cost overruns must be reflected in the appraisal. Otherwise, the costs must be paid by the borrower.
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