Fall 2016 Newsletter

Message from the President      

It's been an exciting summer here at Evergreen Business Capital.  Over the course of the past few months I've had the pleasure to travel throughout the Pacific Northwest giving me the opportunity to meet so many of you in person.  I am truly humbled by the dedication of our many lending partners, SBA staff, and of course the wonderful small businesses out there serving as the engine of our economy.

In June the Small Business Administration began accepting application packages for the Permanent SBA 504 Refinance Program.  In this issue of the newsletter we look at refinance and how it can help small businesses.  Over the last few years the Small Business Administration has been implementing changes to the program in order to provide more small businesses access to capital and the refinance is a big step in the evolution of the 504 program.  

This summer we also saw our SBA Community Advantage Program take off here at Evergreen for non-real estate transactions.  This program allows us to make SBA-guaranteed loans directly to small businesses who otherwise cannot secure bank financing.  Take a look below for a story on  a recent Community Advantage loan we funded.  If you have a client that doesn't quite fit your credit box, contact our Community Advantage team today to see if we can help.

Finally, we wish to congratulate all the Small Businesses that were recognized during National Small Business Week.  We attended SBA sponsored events in Portland, Seattle and Anchorage and were inspired by the stories we heard from small business owners across the Pacific Northwest.  We've included a couple pictures of the festivities in Portland and Seattle.

As always, we value your feedback and look forward to speaking with you.

Patti

Portland - Evergreen Business Capital's Oregon team along with President/CEO Patti Kibbe receive the award for top SBA 504 lender from Portland District Director Camron Doss

Seattle - Columbia Bank's Jamie Sherbondy and Evergreen's Wendy Avila with SBA Seattle District's Entrepreneur of the Year Award winner Ron Baxter

Technical Corner - SBA 504 Refinance

ADVANTAGES OF 504 DEBT REFINANCE

• Replace existing,  adjustable rate debt with a 20 year fixed rate loan while interest rates are at historic lows

• Up to 90% loan to value available without outside collateral

• Limited cash out also available for working capital or other operational expenses

QUALIFICATIONS

• At least 85% of the loan to be refinanced must have been used for acquisition of long term assets, or be a refinance of a loan originally used for this purpose

• Loans must have been seasoned for at least 2 years, with no payments over 30 days late in the past 12 months

• Loan proceeds cannot provide a refinance of Federally-guaranteed loans, or existing 504 first mortgages

• The small business benefitting from the refinance cannot have had any ownership changes in the past 2 years

OTHER CONDITIONS

• Loan to value must be supported by an appraisal dated within 6 months

• Occupancy requirement is 51%+

• Cash out may only be used for operating expenses/working capital; this version of SBA refinance cannot be combined with an expansion or remodel of the property

• Special use properties are limited to an 85% overall LTV, and the first mortgage may not be less than 50% of the appraised value of the property

September 2016 504 Rates

10 Year Term - 4.29%

20 Year Term - 4.08%

The SBA 504 loan term is fixed for the entire length of the loan - ten or twenty years, and the actual rate is determined in the month the loan is funded.  Contact us for more information.

504 Q & A

Discovering details of 504 Refinance

Q:  On a cash out project:  my understanding is that when the loan closes the bank fully disperses the cash out money for items that the borrower has identified during the application (and were approved by SBA as eligible use of funds), and we can immediately begin the debenture funding process (i.e. we don’t have to wait for those costs to come to fruition, like we do with a construction project).  Do I have that correct?

A: Correct.  The borrower does need to keep records of the 'cash out' expenses but there is no need to wait to disburse those funds.

Q: Does the rule about no changes of ownership in the last 2 years apply to a complete change in ownership, or does this include any and all changes. Example:  Client wants to refinance, has over a two year loan history, but had previously bought out a minority owner within 2 years of application.

A: Any (no matter how minor) changes will affect this policy. In your example, the applicant will need to wait 2 years before utilizing this program.

Q: I seem to recall that the past refinance program did not have a “special purpose” requirement and all loans were allowed to have a 10% injection (if qualified otherwise under the refinance rules).  Is this the case, or will Special Purpose properties require an additional 5%?

A: Special Use properties require an additional 5% equity contribution and also requires the 1st party lienholder to lend at least 50% of the eligible project costs.

New Faces

Barbara Broudy joins Evergreen in Portland 

Borrower Spotlight

Wild Scoops and the Community Advantage Program