Small Business Today Magazine MAY 2014 CUSTOMIZED REAL STATE SERVICES | Page 25

borrower to prepare write-ups and analyses for the following five categories:

• Repayment ability – analysis of business and personal cash flow streams.
• Management experience – evaluation
of the owner’s expertise, experience,
and education sufficient for being successful with the business.
• Equity – determination that the borrower’s level of personal cash investment is reasonably balanced against
the debt provided by the lender and
other small business creditors.
• Credit – determination that the borrowing company and its owners have
been reasonably responsible paying
other creditors.
• Collateral – determining that the level
of collateral provided by the borrower is sufficient for SBA guidelines and
the lender’s appetite for risk.

After formal underwriting is completed,
a firm commitment letter will be offered
by the lender for acceptance by the fu-

ture borrower.  Upon acceptance, the loan
closing process begins.

The Loan Closing Process

The loan closing process is the preparation done for the day when the borrower signs loan documents and the lender
funds the loan for the borrower.  Every
small business and SBA loan application
will have a long list of closing and funding
requirements for the borrower and lender
including but not limited to the following:

• A “note” or “promise to pay” will be
signed by the borrower.  The note will
include the terms of the loan including the origination date, the amount of
the loan, the interest rate, the maturity
date, and the collateral.
• Security documents include all those
documents required to be signed and
filed with various governmental entities to perfect a lien on the collateral
for the lender.
• Insurance documents include those
with which the lender insures the title

to property, insures collateral, insures
the lives and ability to work of the
borrowers, etc.
• Various SBA documents will include a
complete SBA loan application package with the lender’s underwriting
and the borrower’s authorization for
background and credit checks.
• Reports from third party professionals such as environmental assessment
engineers, governmental permits, and
real estate, business, and equipment
appraisers, etc.

Depending upon how long the lender
is waiting for third party reports, the closing process can usually be accomplished in
one to three weeks. 
You can learn more about SBA lending and small
business finance on Bruce’s blog at brucehurta.wordpress.com.  For more information about SBA real estate loans for small businesses, contact Bruce Hurta,
Business Lending Manager at Members Choice Credit
Union, at 281-384-2595 or by email at bhurta@
mccu.com.