The lender must keep the signed Form SBA 1050, Settlement Sheets, as well as any other documents supporting the borrower`s use of the loan proceeds. If the lender subsequently requires the SBA to purchase the secured portion of the loan, it must provide full documentation that the proceeds of the loan have been used as approved. In the case of multiple borrowers or COs, apply the same rule using the first CO or borrower listed in the authorization. (Note: The wizard automatically selects the name of the SBA loan based on the borrower and the OC information provided.) Make sure that the initial payment is significantly higher than the amount required to cover the warranty fee. A payment cannot be made solely to recover the warranty fee. It must be part of another disbursement for other loan purposes. The SBA bases its approval on statements in the loan application and on supporting documents. The SBA guarantee depends on the lender: a share purchase can be used to make a change of ownership in an ongoing business. This method may be used when (1) the Company repays or redeems all outstanding shares of existing shareholders, or (2) a third-party purchaser purchases all outstanding shares of existing shareholders. In both cases, certain documents are required at the closing of the loan: the lender must require the borrower to purchase federal flood insurance or other appropriate risk insurance if FEMA (Form 81-93) indicates that part of the collateral, including personal property, is or will be in a special flood risk area. The amount of flood insurance must be the lower value of the insurable value of the property or the maximum coverage limit available, and the policy must include a MORTGAGE CLAUSE/PAYABLE LENDER LOSS CLAUSE (or equivalent) in favor of the lender.

Borrowers who do not maintain the required flood insurance for the term of the loan are not eligible for future support from the SBA. The only exception is when flood insurance, which is required for the safety of personal property, cannot be purchased or is prohibitively expensive. In such cases, the lender must request the waiver in writing from the SBA and explain the circumstances. SBA requires 100% payment and performance guarantee, as well as builder`s risk insurance for all 7(a) loans that use more than $125,000 in SBA-backed product to directly finance construction. This is to ensure that the construction is completed if the contractor does not do so. If you are using the wizard and the loan is structured as an EPC/OC loan, select the check box in the wizard that indicates that the borrower is an EPC. (If the CO is only reported as a co-borrower, the authorization does not include the allocation of rents required for EPC/OC loans in the Guarantee section and does not refer to the requirements that apply to both borrowers and CO in the rest of the authorization.) To simplify things, an LLC certificate is a document signed by all members of a limited liability company or LLC to show that they have formally met to discuss an issue regarding their LLC and reach an agreement. If you received an EIDL loan from the SBA, you may have already received an email from an SBA agent asking you to send an LLC certificate. Compliance with the SBA Loan Guarantee Agreement, Form SBA 750 (Form SBA 750B for short-term loans) and any other additional guarantee agreement required between the lender and the SBA; Unauthorized, inappropriate, uncontrolled or undocumented disbursement of loan proceeds. Even if you are the only member of an LLC, the SBA still wants a signed document to show that you have agreed to receive an EIDL loan from the SBA to your LLC.

You can watch a video tutorial on how to prepare an LLC certificate for an EIDL SBA loan via the following link: www.youtube.com/watch?v=OJ43wsGluRk&feature=youtu.be If the IRS has not responded within 10 business days of the time the lender submitted the 4506T, the lender can disburse the loan, but still needs to receive a response from the IRS by resubmitting the 4506T if necessary. and must make the necessary comparison. SBA will consider waiving this requirement if the lender meets certain strict conditions. In general, the lender must provide the appropriate project documentation and monitor the disbursement of the loan proceeds very closely. This includes using construction mortgages and lien waivers to protect the lender and the SBA and to put their legal claims ahead of everyone else. In addition, the lender must document that the borrower has made the necessary equity contribution to pay for the early stages of construction. PLP lenders have the authority to grant this waiver, provided that the lender documents the waiver in writing and includes the documentation in the loan file. These provisions are intended to ensure the quality of the construction and reduce the risk to both the lender and the borrower in the event that the proceeds of the loan provided for the construction are not sufficient to cover the total cost of construction. In general, the lender cannot allow the borrower to act as its own general contractor (OP 50-10(4)(B), Subsection A, Chapter 5, subsection 6(e)(2), page 110). Review the permission to ensure that all required state-specific options have been inserted.

If the borrower moved to another state after the loan was approved, verify that all required country-specific provisions relating to the borrower`s new country of residence are added to the authorization and loan documents. Approval may require an appraisal of real property or equipment. An appraisal is not required for properties that are pledged as collateral but are not funded by the SBA loan unless the property is the “principal collateral” of the loan. Real estate is considered a “primary guarantee” for loans whose assets to be financed offer a guarantee coverage of less than 50%. If the company has used working capital to purchase physical assets, these funds can be repaid to the company (and not to the owner) from the proceeds of the SBA loan with the appropriate documentation. The authorization specifies whether a warranty should be complete or limited. Form SBA 148 is used whenever the guarantor is responsible for repaying the full amount of the borrower`s loan. Form SBA 148L is used whenever the lender intends to limit the scope of the guarantor`s liability. B for example the amount or duration of the guarantee or the limitation of the guarantor`s obligation to the guarantor`s interest in property (real or personal) pledged to guarantee the repayment of the loan. If a warranty is limited, the authorization describes the limitation.

The lender must use an SBA/IRS Form 4506T to request a transcript, not a copy, of the tax return. The transcript provided by the IRS is a line-by-line summary. (Partnership and corporate returns are not fully transcribed, but are processed in a form letter with limited financial data.) To expedite the loan application process, lenders are advised to file Form 4506T as soon as possible in the application process. Usually, the IRS responds within two weeks. If your LLC has more than one member or owner, you may have noticed that the EIDL Covid-19 loan agreement and agreement only needs to be signed by one LLC member to get your loan approved. The SBA wants proof that all members of the limited liability company have agreed to accept the SBA`s Covid-19 EIDL loan, and therefore they require all LLCs to send an LLC certificate stating that all members of the entity in LLC have agreed to accept an EIDL loan from the SBA to their LLC. Passive companies and eligible operating companies (EPC/OC) – SBA allows for a lending structure where the borrower is a passive owner of the assets to be financed with the proceeds of the loan and leases the assets to an “operating company” (OC). In these cases, the borrower is referred to as the “Eligible Passive Company” (EPC). Form SBA 601 is required under federal citizenship laws if a product over $10,000 is used for construction.

This form, known as the “Compliance Agreement”, is a certificate attesting that the contractor has complied with anti-discrimination laws. The contractor and borrower must complete form SBA 601 no later than after the loan ends. Form SBA 601 is not required when funds secured by SBA are used to refinance the interim debt. The boilerplate is also an excellent reference document. References to specific regulations, standard operating procedures (SOPs) and notes for each section are contained in grey boxes above each section. Therefore, SOP references are displayed in this chapter only for items that are not included in the sentence. Even if you are an individual member, LLC, SBA still wants you to write and sign a document confirming that you agree to accept the loan. This should not be surprising, because on page seven of the EIDL loan agreement it says: Within 180 days of accepting the loan, you must send a certificate of dissolution for it to appear on the contract. You can use our simple template, or you can also use a more detailed template available on the SBA website.

.