10 Tips To A Faster SBA Loan Closing

“It takes a village” is a popular idiom that means many people must cooperate to achieve a goal.  When it comes the SBA loan closing process, there are many moving parts that must work in an organized fashion with open communication to get to the finish line. Everyone wants to close their deal as quickly as possible.  When it takes time, the borrower will sometimes point a finger at members of his/her village without thinking about the remaining fingers pointing in the opposite direction.

It’s important for your closing team to communicate how to speed up the SBA loan closing process. Below are 10 ways a borrower can help: 

1. Find a lender that has a focused SBA department. It's hard to dabble in SBA.
2. Engage counsel with experience closing SBA transactions or a background in the specific type of transaction being financed.
3. Ask questions about your deal structure and understand the requirements for SBA loans.
4. If there is injection, make sure the money is available and have documented statements.
5. If there is a seller note, don't hide the SBA Standby Agreement. If the seller note is being used as injection, the note will have to be on full standby (no principal or interest payments during the term of the loan). If the seller note is not being used as injection, the seller should be aware of the approved repayment terms and other subordination language contained in the Standby Agreement, as the debt will still need to be subordinated even if payments are permitted.
6. If there is a leased location, the lender likely has a landlord subordination form. This form should be provided to the landlord as soon as possible. If there is an unsigned lease, consider presenting the lease and the landlord subordination together.
7. If you have a draft contract, provide the lender and/or lender's counsel with a copy before it is signed to make sure there are no required compliance revisions or eligibility concerns.
8. Contact your insurance agent(s) early about any new insurance products or insured parties that will need coverage before your closing date.
9. If you need to take out a life insurance policy to assign, start the process as soon as possible.
10. Communicate often and early about closing logistics and do not go on vacation the week of closing to a remote destination with no cell phone service, e-mail access, or connection to the world.

A village might include a variety of parties with varying interests.  However, it is important to remember everyone has the same goal – to close the transaction efficiently and accurately with as little headaches as possible.

By Scott Oliver

Director – Lewis Kappes

About Scott:

Scott Oliver is a Partner at Lewis & Kappes, P.C. in Indianapolis, Indiana. Through his practice, Scott represents banks and non-bank lenders involved in commercial financing, with an emphasis on government guaranteed transactions.

As a closing attorney, he works in all stages of the lending process, including structuring, credit review, compliance, eligibility, lien perfection, title review/negotiations, preparation of security instruments/loan documents, subordination agreements, workouts, collections, foreclosure, and bankruptcy.

Scott has closed hundreds of SBA 7(a) loans, SBA 504 loans, SBA CAPLine loans, and a wide range of conventional facilities. While stationed in Indianapolis, Scott’s team of attorneys and staff have closed SBA transactions for clients in all 50 states.

Outside of his traditional roles, he frequently speaks about personal branding, practice innovation, and supporting the "human" side of practicing law. Scott is also an adjunct professor at the Indiana University Robert H. McKinney School of Law where he teaches Legal Communication & Analysis.