Enterprise Funding Corporation provides all 504 loan-servicing functions. EF reviews all servicing requests for eligibility and reasonableness and submits the request to the SBA servicing center in Fresno, California. In most cases, EF receives a reply within 3 business days. To help expedite servicing requests, EF requires that all reporting requirements have been met. This includes providing the following:
- Annual Financial Statement
- Current Interim Financial Statement
- Copy of the paid property tax receipt
- Proof that the hazard insurance is up-to-date
- Other reporting requirements as specified in the SBA Authorization for Debenture Guaranty
EF will undertake certain actions with Fresno approval which include:
- Prepare legal documents for SBA's counsel's review and the Agency's signature
- Modify financial reporting requirements
- Approve up to 6 months cumulative payment deferment (or 20% of the original amount of the loan, whichever is less) if the borrower can reasonably project that it will bring the loan current within five years
- Release collateral up to the cumulative value of 20% of the original loan amount, if:
A) Proceeds from the release are for business purposes;
B) The remaining collateral is reasonable in relation to the loan balance;
C) The release will not decrease the value of other collateral; or
D) The action is necessary for the survival of the business and future repayment from profits is anticipated
- Substitute equal or greater equity in like kinds of collateral
- Subordinate to new third party financing, if the terms are more favorable, the borrower receives no funds, and that the term equals or exceed the term of the original loan
- Make changes to life insurance or hazard insurance requirements, release insurance proceeds for the repair or replacement of damaged collateral, and release the cash surrender value of life insurance
- Approve changes in form of business structure i.e. LLC, LLP, Sub-S Corp etc.
General Servicing Requests
- Balance and interest paid information
- Change mailing address
Collateral Actions
- Release collateral, both project and non-project
- Subordination of SBA lien when refinancing 1st TD to improve cash flow or expand business
- Substitution/exchange of collateral caused by sale of business etc.
Guarantor Actions
Release or substitution of Guarantors resulting from retirement, sale of business or assumption
Loan Assumptions
If the business is sold, qualified buyers can assume the loan, often with full release of original borrowers and guarantors. A request to assume an existing SBA 504 loan will be reviewed for eligibility and credit worthiness. There is a required 1% assumption fee plus reimbursement for legal fees and other out-of-pocket fees.
Loan Payment Deferments
Principle and interest for up to 6 months may be deferred, if repaid within 5 years.
Insurance
The borrower must maintain appropriate insurance coverage, life and hazard, as specified in the SBA Authorization for Debenture Guaranty. EF must be notified of any changes in coverage.
Loan Pre-Payments
To ensure the payoff of your loan is accomplished smoothly, please keep this information in mind:
- CDC must have a 45 day written notice that the loan is going to prepay.
- CDC may require a good faith deposit of $1,000. Good faith deposits are required to lock in your payoff date and are not refundable if your loan does not payoff. Deposit must be made 10 days prior to the scheduled prepayment date.
- If your loan funded after January, 1992, a good faith deposit is always required by the SBA.
- 504 loans can only be prepaid on the 3rd Thursday of any month.
- Prepayment premiums may apply. Premium levels decline every semi annual payment date until the 10th year of the loan funding. (or 5th year on a ten year loan)
Please contact our office immediately for more information and to establish a payoff date.
Change in Account for Monthly Loan Payments
Monthly payments are withdrawn automatically from a designated account, through the ACH system. This is set up at the original loan closing. To change accounts, the borrower must submit a new Debit Form and a blank VOID check from the new account. The form should be signed and forwarded, along with a blank VOID check. Generally, it takes 30 days to process a change of account request. Contact Ron to obtain a Debit Form.
