For your convenience, we’ve created FAQs on loan closing to help with your knowledge.
If you do not know your TMC contact yet, please call 888.989.8855 to be connected to your loan team.
As the takeout lender, the SBA pays off the interim loan provided by your third party or bridge lender. The third-party lender finances the first mortgage on the real estate or equipment. TMC Financing is a CDC, certified by the SBA.
Find these requirements outlined in the SBA Loan Authorization. If you need a copy, send a request to your closing officer. All documents requested by the CDC must be received and reviewed by the CDC’s closing attorney. Once all SBA requirements are met, TMC submits your loan for funding.
SBA requires evidence your business can legally operate in the location purchased through the 504-loan program. Your license may be from either the city or county, as applicable to your area and type of business.
Borrower must obtain and maintain adequate insurance coverage for the life of the loan. Refer to section E.1 Insurance Requirements in the SBA Loan Authorization.
Common insurance requirements:
Real Estate Hazard Insurance coverage on all real estate collateral; that is, for the loan in the amount of the full replacement cost/insurable value referenced in the appraisal. If full replacement cost insurance is not available, coverage must be for maximum insurable value.
Personal Property Hazard Insurance coverage on all equipment, fixtures, or inventory; that is, collateral for the loan in the amount of the full replacement cost/insurable value referenced in the appraisal. If full replacement cost insurance is not available, coverage must be for maximum insurable value.
Flood Insurance if any portion of a building; that is, collateral for the loan located in a special flood hazard area. If any equipment, fixtures, or inventory that is collateral for the loan (“personal property collateral”) is in a building, any portion of which is located in a special flood hazard area, borrower must obtain available flood insurance for the personal property collateral. Insurance coverage must be in amounts equal to the lesser of the insurable value of the property or the maximum limit of coverage available.
The SBA requires a list of all furniture, fixtures, and equipment used as collateral for the SBA 504 loan. Refer to section D. Collateral Conditions in the SBA Loan Authorization. This list will be attached to the UCC or fixture filing in the county of your property. For your convenience, feel free to use this template. You must provide all furniture, fixtures, and equipment cited as collateral for the loan on this list. For any items with a value of $5,000 or more, a serial number is also required (when available).
Once loan documents are prepared, we send them to escrow for your signature. The escrow officer contacts you to schedule signing. If you require specific accommodations, please let your closing officer know as soon as possible.
We determine your interest rate the week of funding because of the timing of the bond sale. Once available, our servicing department sends you your rate and payment information. Again, when available, our servicing department sends you your rate and payment information.
The 504 loan fees consist of the guarantee fee, funding fee, processing or packaging fee, closing costs, and the underwriter’s fee. To see a breakdown for your loan, refer to section B. Project Financing in the SBA Loan Authorization, also outlined in your TMC Assistance Agreement. The only fees that can be paid upfront are the processing fee and the closing costs. Please contact your closing officer to arrange payment of these fees outside of your SBA 504 loan.
Once the SBA loan funds, our servicing department provides you with your rate, payment amount, and amortization schedule. The first payment date is the first business day of the month.
The interest rate is based on a bond sale, loosely tied to the 5- or 10-year U.S. Treasury sales rates. Your rate locks on the date of funding and fixes for the term of your loan. The rate cannot lock in before funding. Please see the historical rate chart to see how SBA 504 rates tend to trend below market fixed-rates.
SBA rounds the Gross SBA Loan Debenture Amount to the next thousand. Once your loan funds, the balance to the borrower is refunded to you by Wells Fargo, who is the SBA Central Servicing Agent (CSA). Gross Debenture – (net debenture proceeds + administrative costs ) = Balance to borrower. Reference section B. Project Financing in the SBA Loan Authorization for the breakdown or call your closing officer for guidance on this information
After your loan funds, we process your deposit fund within six weeks. Once your account has been billed with all incidentals (please review your TMC Assistance Agreement regarding deposits), the remaining deposit, if any, is mailed to you from TMC Financing.
Payments are due on the first business day of the month by automatic debit from your preferred bank account. Your first auto-debit will occur on the first business day of the month after your loan funds from the account you provided at closing. SBA requires an auto-debit payment set up. No exceptions.
FAQs for construction projects
Please become actively involved as your loan process nears completion. Inform us about 30 days out from completion or have your lender contact us. Then, we send you a letter outlining precisely what we will need to close your SBA loan.
- Meet conditions outlined in the SBA 504 Loan Authorization. View SBA 504 loan construction requirements here.
- Ensure your construction lender confirms to TMC when construction completes and all funds disbursed. Then, final project costs can be verified.
- File Notice of Completion. Timely filing is vital because TMC must allow for your contractors or subcontractors to clear all mechanics liens.
- Provide TMC with updated financial information to verify that your financial condition has not changed substantially since your SBA loan application.
- Sign your SBA loan documents and pay any escrow/title charges incurred.
- Execute all loan documents fully and submit to the SBA District Office for final approval to fund. Your SBA 504 loan will fund approximately one month later.
Your construction lender monitors the progress of your project. TMC also tracks the status of construction, estimated completion date, and fund disbursement to the contractors in cooperation with your construction lender.
The project owner or general contractor issues a written Notice of Completion to inform all parties that project work is complete. The written Notice of Completion also sets the period within which concerned parties may exercise their lien rights. You can send the Notice of Completion directly to the escrow officer who will handle recording or go to the county recorder’s office directly.