THE INCREDIBLE SPECIAL CONVENTIONAL
BUSINESS LOAN PROGRAM

• Applicants whose source of income can not be verified

• Applicants who may have had some credit problems

• Business owners who desire to take cash out of their property

• Entrepreneurs and self-employed people wanting to purchase a location for their business

• Borrowers who want to limit their investment to as little as a 5% down payment
  (SBC allows CLTV's up to 90%)

Q.  What type of income verification do you require?

   A.  One of the things that separates SBC from the more conforming commercial lenders is that we do not verify the borrowers personal income.  We require a completed application (Fannie Mae 1003) with the borrower income and assets stated for pre-approval.  The only income verification we require is on the subject property.  We require rent rolls, leases and estoppel certificates on properties with more than four units certified by the borrower.  Estoppel certificates are only required if there is one unit in a building which is responsible for more than 40% of the total income.  Stated income and stated assets allows self-employed borrowers who cannot verify all of there income to qualify for financing.

Q.  Can you finance properties that have a high environmental risk such as gas stations, auto repair or dry cleaners?.

   A.  When these loans are pre-approved SBC requires the borrower and/or seller to complete an environmental questionnaire which is submitted to an environmental insurance company.  They review the information provided and issue a policy based on the environmental risk of the property.  The premiums usually range anywhere from $500 to $2600, saving borrowers money over the cost of a typical Phase 1 environmental report.  The use of environmental insurance allows SBC to arrange to finance the "high risk" properties which more conforming lenders will not.

Q.  What is the borrowers profile?

   A.  One common denominator among all borrowers is that they have a tremendous amount of real estate equity and an immediate need for short-term capital.  They cannot or will not go through the strenuous and time-consuming underwriting process required by conventional credit lenders.
 

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REQUIRED INITIAL DOCUMENTS

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LOAN PROCESS

1.  Commercial Appraisal Review Process

Our real estate department utilizes the appraisal report to assist in the determination of the property value.  However, the lender's appraisal reviewers arrive at a valuation independent of the appraisal report and it is the lender's valuation that is utilized to compute the LTV.

All appraisals are subject to review by the lender's real estate department.  All appraisals are desk reviewed, some require field reviews, and others are rejected as inadequate.  In cases where there are questions concerning the appraisal report, the lender's real estate department will contact the appraiser for clarification.  In many cases, appraisers are able to supply additional information to support their opinion of value, however, it is important to note that this process always delays the review process.  The lender reserves the right to reject appraisals that are deemed unacceptable by our staff.

It is important that appraisers and applicants be made aware of the lender's appraisal requirements before the appraisal is started in order to avoid any misunderstandings.  Also, appraisers need to make themselves available to the lender's staff appraisers in order to avoid delay in the appraisal review process.

Supporting Documents
The appraisal should be accompanied by appropriate documentation (i.e. agreement of sale, rent roll, commercial lease, etc.).  The lack of relevant documents will delay the review process.

Field Review
The initial review of an appraisal may result in a request for a field review, a process that is controlled by the lender.  The applicant pays the fee for the field review.

Effective Dates
The effective date of an appraisal must be within six (6) months of the date of closing.  If the effective date is between six and nine months of the date of closing, the appraisal may be updated by the original appraiser.

2.  Work Flow Process

Because this loan program is stated income / stated asset, SBC can arrange closing a loan as quickly as an appraisal and title report can be submitted and accepted by lender.  Generally, the lender closes loans within 45 days after approval.  The process depends on the status of the appraisal and title report.

The initial submission for pre-approval requires only a completed Fannie Mae 1003 and SBC merged credit report with credit scores and other required documents.

Pre-approvals are generally issued within 72 hours of receipt.  The pre-approval is a conditional commitment to fund a loan based solely on the information supplied by the borrower and the requirements stipulated in the pre-approval.

SBC utilizes the credit report to evaluate the applicant's credit and grade the loan as to price and permitted LTV ratio.  the borrower's credit standing as reflected by the credit score may result in a change in price and LTV, as well as, denial of the loan.

Additional supporting documentation or stipulations contained in the pre-approval must be submitted for underwriting review and acceptance prior to closing.  Requests to waive pre-approval stipulations can only be authorized by the lender's underwriter issuing a revised pre-approval form.  No oral waiver of stipulations is allowed by any lender's employee and will not be honored by lender under any circumstances.

Applicants need to be aware that lender's staff appraisers review all appraisals.

Mortgagor title commitments should be ordered once the appraisal has been approved.  The lender requires that all exceptions contained in Schedule B11 of the title report be removed as of the time of closing.  No loan can close with exceptions on section B11 of the title report without the approval of lender's legal department.

3.  Underwriting Process

Pre-approval Underwriting

Generally, a pre-approval contains all of the conditions necessary to have a loan approved for closing.  A completed Fannie Mae 1003 and a tri-merged credit report is required in order to be submitted to underwriting for pre-approval.

Debt Ratio
The maximum allowable debt ratio is 55%.  The maximum debt ratio is waived for investor loans with credit scores of 620 or above or where the LTV is 50% or less.  The maximum debt cannot be waived on any owner occupied property.

Income
This loan program is stated income, but the income must be stated by the applicant and included in section V. of the Fannie Mae 1003.  No application can be considered complete with this section left blank.  No employee is allowed to complete this section of the 1003 for any reason.  SBC does not verify an applicant's income and relies solely on the applicant's statements contained in the 1003 application.

Credit
SBC utilizes the middle of three credit scores or the lower of 2 credit scores of the primary borrower.  The primary borrower is the applicant stating the highest monthly income on the 1003.  SBC utilizes the credit report to price and grade the loan for pre-approval.  All loans are subject to a credit report ordered by lender prior to closing.  Any change in the applicant's credit status as determined by a change in the credit score may cause the loan to be re-priced and the LTV lowered.  The loan may also be denied for a serious deterioration of credit quality.

Assets
SBC does not verify an applicant's assets unless the circumstances of the loan, in the judgment of the underwriter, warrant verification of assets.  Applications should have sufficient assets to complete the transaction request in the application.

Employment
Lender does a verbal verification of employment prior to closing.  All self-employed borrowers must have a verifiable business in existence at the time of closing.

Licenses
Lender requires all commercial borrowers and self-employed borrowers to submit copies of current business licenses.  Special licenses for automotive properties are required, as well as, properties containing underground tanks.

Verification of Mortgages
Verification of mortgage payment history is required in instances where the mortgage is not reported in the tri-merged credit report.  In these instances lender requires 12 months cancelled checks, bank statement or, if applicable, a completed verification of mortgage.

Verification of Rent
Verification of rent may be required based on credit history and loan circumstances.  The form of verification must be 12 months cancelled checks.  A rental verification form can only be utilized in instances where a management company or institution is collect the rents.

Rent Rolls
Rent rolls are required on all properties of 5 or more residential units and any commercial property that is not 100% owner occupied.  The rent roll must be certified by the applicant as to authenticity and properly signed and dated.

Estoppel Certificates
Estoppel certificates are required for non-residential properties (9+ units & mixed-use are excluded) where one or more tenants each occupy 40% or more of the square footage of the subject property.  The tenant executes the estoppel certificate and its purpose is to state the tenant's understanding of the terms and conditions of the lease.  In addition, the estoppel certifies to lender that the tenant's rights of ownership are subordinate to lender's rights as the mortgagee.

Surveys
The lender does not require surveys unless the title underwriter will not remove the survey exception for the title report without a survey.

Title Insurance
The lender reserves the right to accept the title insurer.  Title insurers must generally be approved and in good standing with Fannie Mae and Freddie Mac.

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ELIGIBLE BORROWERS

Any legal entity, including individuals, public and private organizations, may borrow.  There is no size restriction on the business.  There are no owner occupied/user requirements.

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ELIGIBLE USE OF LOAN PROCEEDS (But Not Limited To):

     •  The program may be used for most types of commercial development
     •  Purchase of existing business
     •  Financing business and industrial acquisitions, conversion, expansion, repair, modernization,
       development costs or working capital
     •  Purchase equipment, facilities, machinery, materials or supplies
     •  Furniture and fixtures
     •  Processing and marketing facilities
     •  Accounts receivable and inventory
     •  Refinance existing loans, leases, or other debt for viable projects
     •  Loan fees, professional services, and feasibility study costs

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LOAN PURPOSE

• 15 or 20 year Fixed rate

• 15 or 20 year 2/1 Adjustable
    ARM Caps:  2% annual, 6% life (fixed first 2 years & then adjusted annually)
    ARM Margin:  Start rate minus prime plus 1%

• Purchase or Refinance / Land Contracts / Leaseholds

15 Year Fixed & ARM:
Prepayment lockout for initial 2 years.  Five percent prepayment premium through year 5 on current balance.

THIRD PARTY REPORTS  

We look for quality loans that will support a stable employment source.  The factors we review to determine loan quality include:

     •  Equity:
          10%-30% down may be required at the loan closing, depending  upon  the risk factors, credit
        score, and property type, presented by your request.

     •  Profitability:
          Your application should show historic cash flow adequate to service the debt.

     •  Management:
          Management  must  demonstrate  experience  in  the  industry and competence in production,
        marketing, finance and personnel management.

     •  Collateral:
          Collateral must be sufficient to secure the loan.

     •  Guarantees:
           Personal guarantees from owners, major stockholders and/or partners are required.

SOME EXAMPLES OF SPECIAL PURPOSE PROPERTIES

If your business falls within one of the following categories, it is considered a Special Purpose property.

     •  Lending and investment institution or insurance company
     •  Educational institution
     •  Community antenna television service or facility

• Finance lines of credit

• Finance agricultural production with the exception of specialized crops such as forestry, commercial nurseries, aquaculture, hydroponics, mushrooms or commercial custom feed lots

• Paying off a creditor in excess of the value of the collateral

• Guaranteed lease payments

• Agriculture production, except in certain cases

• Prostitution

• Finance any illegal business activity

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     •  Adequate cash flow to meet debt obligations and operating expenses
     •  Adequate collateral value
     •  Personal guarantee required for all owners

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There is no fee to pre-apply
No additional documents and No credit reports
are required at this stage

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If you want an answer to a simple question or prefer to not complete the online application, please contact us by e-mail below:

1. What is the exact nature of your business?

2. How long has the business been operating?

3. How long have you owned it?

4. How much do you want to borrow?

5. What is the specific purpose for your loan request?

6. Do you have a current business plan?

7. What have been your sale and profits for the last 2-3 years?

8. What collateral do you own (business or personal) that can be used to back the loan?
   Be specific and include real estate (property value and lien balance).

9. Explain your credit history and your credit score, if known.

Due to heavy volume, initial contact with SBC should only be by completing the Pre-Application form or by Email.  Our Email address is accessed by clicking on the "Email link" below.  Thank you for your patience and understanding.

•  Email:  Loan@StateBusinessCapital.com
                                      
An SBC representative will reply to you promptly

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