25 Year Debenture Now Available

SBA announced the availability of a 25 year maturity for 504 loans. This is in addition to the 10 and 20 year 504 loans that are currently available in the 504 Loan Program.

About the 25 year debenture:

- This new 25 year 504 Debenture is available for 504 projects that are approved on or after April 2, 2018

- The term of a 504 Debenture for any 504 project approved prior to April 2, 2018 may not exceed to 25 years

- The voluntary prepayment schedule will stay at 10 years for the 25 year loans, the same as for the 20 year loans

- The term of the Third Party Loan accompanying a 25 year 504 loan must be at least 10 years

- The fee structure is the same as for 20 year loans and debentures

- Rates for the 25 year debenture are determined at the time of funding and are anticipated to be set at a spread above the 20 year debenture rate. Actual rates will not be known until the debentures are presented for sale. SBA expects to offer this debenture funding monthly

 odtülüler dershanesi

25-Year Debenture Announcement

SBA officials announced that the Office of Management and Budget (OMB) has cleared the way for the issuance of 25-year debentures in the SBA 504 loan program. This will allow small business borrowers a longer-term option in addition to the existing 10 and 20 year loan products. Improved cash flow is of vital interest to all businesses, especially those served by the 504 program, and the loner maturity is a vehicle that can serve that purpose.

The new 25-year debenture is a FY18 initiative and the details are still being finalized by SBA. While the timeline specifics have not been announced it is likely the launch will not occur until after the first quarter for FY18. 

 Ankara Bebek Bakıcısı

Historic Low 504 Loan Pricing and Mitigated Risk

Most people would agree, when prices are good it is a good time to buy. For the month of September, the effective rate on 504 loan is 4.08% fixed for 20 years and 4.28% fixed for 10 years.butik dershane Rates have been consistently good for several months, yet these are the best rates we have seen in years.

The 504 loan product has been a main stay in economic development through fixed asset financing for years. The reason for it's success can partly be attributed to the key advantages it offers both borrowers and lenders.Ankara Dershane

The key advantages it offers borrowers include a low down payment, a low fixed rate (thus a hedge against rate fluctuations) and the inclusion of most soft costs. For the lender, the 504 loan product offers limited credit and concentration risk while still meeting their customers' needs. In addition,veri kurtarma  Wakarusa Valley Development will shoulder the underwriting and packaging of the loan!

Given these advantages and our current economic cycle, low pricing and mitigated risk go well together, don't you think?hazır ofis If you have a prospective project, give us a call. Let's keep our momentum in moving our community forward.


504 Debt Refinance Program Requirements

As we announced in December, SBA will permanently reinstitute the 504 Debt Refinancing Program. As promised, here are the new rules and requirements to the program:

What is the Debt Refinancing Program?
Under the program, small business will have the ability to restructure a portion of their debt at low fixed interest rates up to 20 years.

Statutory Changes:
The Act made the following statutory modifications to the 504 Debt Refinancing Program:

- The 504 Debt Refinancing Program will be in effect only in any fiscal year in which the subsidy cost to the Federal Government of making guarantees under the 504 Debt Refinancing Program and under the 504 Loan Program is zero.

- Elimination of the alternative job retention goal authorized previously by the Jobs Act. Accordingly, all refinancing projects must satisfy the job creation and retention requirements that apply to any standard 504 project.


- The Borrower must have been in operation for all of the two year period ending on the date of application, as evidenced by the financial statements submitted at the time of application. If the ownership of the Borrower has changed, either partially or fully during the two year period, the Borrower is considered a new business and the Borrower's debt is not eligible for refinancing under the 504 Debt Refinance Program.

- Any refinancing under the 504 Debt Refinancing Program must include Qualified Debt, as defined below. In addition, as further described below, the refinancing may also include Eligible Business Expenses, including "Business Operating Expenses" and "Other Secured Debt".

- "Eligible Fixed Assets" are one or more long-term fixed asset, such as land, buildings, machinery and equipment, acquired, constructed or improved by a small business for use in its business operations.

- "Qualified Debt" means a commercial loan:
- substantially all (85% or more) of the proceeds of which were used to acquire an Eligible Fixed Asset. If the Eligible Fixed Asset was originally financed through a commercial loan that would have satisfied the "substantially all" standard and that was subsequently refinanced one or more times, with the current commercial loan being the most recent refinancing, the current commercial loan will be deemed to satisfy this requirement
- that was incurred not less than two years prior to the date of the application
- that was for the benefit of the small business seeking the refinancing
-that has been secured by the Eligible Fixed Asset for at least two years
- for which the borrower has been current on all payments due for not less than one year preceding the date of application. "Current on all payments due" means that no payment was more than 30 days past due from either the originall payment terms or modified payment terms (including deferments)
- the Qualified Debt may consist of a combination of two or more loans, provided that each of the loans satisfies the Qualified Debt Requirements.kızılay dershane

Borrower Contribution:

- In addition to a cash contribution, the Borrower's 10% contribution may be satisfied by its equity in the Eligible Fixed Asset(s) serving as collateral for the Refinancing Project or by the equity in any other fixed assets that are acceptable to SBA as collateral.

- An independent appraisal of the fair market value of the project assets and any additional assets offered as additional collateral must be provided. This appraisal must be dated within six (6) months of the date of application.

Same Institution Debt:

- When the loan being refinanced is Same Institution Debt (bank debt) the Third Party Lender (loan lender) may modify its existing loan documents (Note, Deed of Trust/Mortgage, etc.) instead of requiring the Borrower to execute and record new loan documents for the Third Party Loan.Kuveyt Vize

Other Than Same Institution Debt:

- When the loan being refinanced is not same institution debt, SBA may permit the lender of the debt to be refinanced to assign its existing loan documents to the Interim Lender and if an Interim Lender is used, or to the Third Party Lender if not Interim Lender is used. The existing loan paylaşımlı ofis documents may be modified, as appropriate, rather than requiring new documents executed for the Refinancing Project. The Interim Lender, if any, may then assign the documents to the Third Party Lender.


- No Refinancing of loans with an existing federal guaranty (e.g. a 7(a) loan or USDA loan).

- No refinancing of loans which is already part of an existing 504 project.

- No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss causing a shift to SBA or all or a portion of a potential loss from existing debt.

The Sacramento Loan Processing Center will begin accepting applications June 24, 2016.

We are very excited about the reinstatement of this program. Call us today to discuss potential projects that may be eligible for the 504 Debt Refinancing Program or to go over any questions you may have regarding this announcement.

Also, if you would like to schedule a bank presentation of those changes to the 504 Loan Program to your lending team, please let us know!


SBA Life Insurance Requirements

Although obtaining life insurance on the primary business owner may be a credit issue, generally SBA requires some type of life insurance coverage on all SBA loans.

Credit decision aspects include:
-  Is the repayment of the loan depended upon an owner's active participation in the business? If yes, life insurance is required
-  Are there other sources of repayment or adequate collateral available? If yes, life insurance coverage may be waived or coverage can be less than the loan balance
-  If the owner dies and there is not adequate life insurance coverage, and there is a loan deficiency, SBA may repair / deny payment of the guaranty

The lender must:
-  Obtain a collateral assignment identifying the lender as an assignee with the assignment acknowledged by the home office of the insurer
-  Assure the borrower pays premiums on the policy
-  Have a copy of the life insurance policy
-  Include insurance requirement and amounts in credit memo and keep in file

If a lender makes the decision not to require life insurance, the file must be documented with the decision outlining why the lender does not believe life insurance is necessary and / or how the lesser amount was determined.


7(a) General Information

The SBA 7(a) loan program is the most basic and flexible SBA financing option for small businesses. Loan proceeds can be used for a number of uses including working capital, equipment purchases, and the refinance of eligible debt. The highlights of the program include but are not limited to the following:

-  Guaranty percentages are based on the loan amount. The SBA will guarantee up to 85% of a loan for $150,000.00 or less and up to 75% of a loan greater than $150,000.00

-  Interest rates are negotiated between the borrower and the lender but are subject to the SBA maximums, which are pegged by the Prime Rate.

-  Loan maturities are based on the ability to repay, the purpose of the loan proceeds, and the useful like of the assets financed.

-  To offset the costs of the SBA's loan programs to the taxpayer, the Agency charges lenders a guaranty fee and servicing fee for each loan approved and disbursed. The amount of the fee is based on the guaranty portion of the loan.

Wakarusa Valley Development will prepare and package 7(a) loan applications on behalf of your bank and customers and work directly with the SBA through the approval process. Once approved the participating lender will close, disperse and service the loan.

Put our experience and knowledge of the 7(a) program to work to help meet the needs of your customers while enhancing your lending opportunities!


Keep 504 In Mind

Despite the winter weather, there is nothing gloomy about the direction of the economy. As small businesses look at their options, keep the 504 Loan Program in mind. It is an outstanding product in the long-term stabilization of the economy.

Please do not hesitate to call us to brainstorm and discuss loan structure or see if a project may be eligible for the 504 Debt Refinancing Program. We love talking shop. As an added value we will be glad to meet with you and your customers early in the loan assessment process to explain the 504 program and answer any questions they may have.


Celebrating 30 Years of Servicing our Community

That's right! In 2016 Wakarusa Valley Development will celebrate 30 years of service. Our SBA loan programs and services have helped countless lenders provide credit to qualified borrowers while mitigating participating lender risk with the 504 and 7(a) loan programs. We have seen many changes in the lending landscape over the years, but one thing stands out above all others - We are still here servicing our local community.

As we move through our 30th year, our goals remain the same: to make your lending life easier through the SBA solutions and services we provide. Feel free to give us a call or send us an email. We love to hear your feedback, answer questions or discuss what we can do for your next client!


Take the Mystery Out of the 504 Loan Program

Small businesses, the backbone of our economy, are moving and shaking again and the 504 Loan Program remains one of the best financing tools available to them. That being said, we do understand the 504 Loan Program can seem a bit mysterious at times. Wakarusa Valley Development is here to clear the mystery! Whether you are new to the SBA 504 Loan Program or just need a refresher, we are your resource for information.

Here are just a few ways to utilize us as your 504 Loan resource:
- Visit us at our website for program information, rates, forms, calculators, FAQ's and more
- Call us to schedule a brief presentation to you and your colleagues. We will travel to you and put together a tailor-made presentation for your group or organization
- Invite us to meet with you and your customer to discuss the 504 Loan Program as an option
- Call us for a Wakarusa Valley Development 504 Loan Pricing Sheet for you to present to your customers
- Simply give us a call or shoot us an email with any questions

We offer all of the above services as an added value to you free of charge. So what are you waiting for? Let us get to work for you!


Changes to the fee structure for Fiscal Year 2016, effective Oct 1, 2015

Each year the SBA reviews the fees payable to SBA by 7(a) Lenders, Certified Development Companies, and borrowers to determine if they are sufficient to cover estimated costs of the 7(a) and 504 loan programs.

SBA has announced the following reductions for SBA's FY16:

For 7(a) loans greater than $150,000 approved in FY16 the following has changed:

- The on-going guaranty fee or annual service fee is reduced to 0.473 percent (47.3 basis points) of the guaranteed portion of the outstanding balance of the loan.

- The upfront guaranty fee will continue to depend on the loan amount and the maturity of the loan (unchanged from FY15).

- For loans with a maturity that exceeds 12 months, the applicable guaranty fees remain:
        - For loans of $150,001 to $700,000 :  3% of the guaranteed portion
       - For loans of $700,001 to $5,000,000 : 3.5% of the guaranteed portion up to $1,000,000 PLUS 3.75% of the guaranteed portion over $1,000,000

- For loans with a maturity of 12 months or less, the guaranty fee remains 0.25% of the guaranteed portion.

For 7(a) loans in the amount of $150,000 or less approved in FY16 there are no changes from FY15.

- Both the annual service fee and the upfront guaranty fee will be zero. Since the fees charged to the lenders will be zero, lenders may not assess a guaranty fee to the borrower in connection with these loans.

- If two or more SBA guaranteed loans are approved within 90 days of each other, the guaranty fee is determined based on the aggregate amount of the loans. This represents no change to current policy. Thus, if the total amount of multiple loans approved within 90 days is greater than $150,000 the normal fees apply.

As a reminder - WVDI will package the 7(a) loan guaranty application and will work directly with the SBA through the approval process. Once approved, the participating lender will close, disburse and service the loan.

For 504 loans approved during FY16 the following has changed:

- The one-time guaranty fee that SBA is authorized to charge to 504 borrowers has been reduced to zero in FY16. The annual fee is reduced to 0.914% (91.4 basis points) of the outstanding balance of the loan.

Please let us know if you have any questions or concerns regarding these changes. Let our experience and knowledge of up-to-date SBA requirements help you meet the needs of your customers quickly and enhance your lending possibilities.



504 Interest Rates

20 Year Rates

July 5.36%
June 5.32%
May 5.22%

10 Year Rates

July 5.30%
May 5.30%
March 5.11%

* Interest rates may vary.

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