Thanks for asking! From our experts: Here are answers to the top questions from our June 18th 504 Loan Webinar. We’ll post each Q&A here on the JRB News Ticker the week following each Webinar. Missed a Q&A? Not to worry. They’re archived on the JRB eBulletins Website Page. Check ’em out. And keep those questions coming!
Q&A: JRB 504 LOAN WEBINAR JUNE 18, 2020
Q: When the PPP loan is added to the cash flow analysis does the borrower need to show historic coverage or only going forward?
A: If historic cash flow is not evident, projections must show repayment ability.
Q: When sending a check to Wells Fargo, should the Borrower include its SBA Loan Number?
A: Yes, the check number should be listed on the check. Also, if the account name on the check doesn’t match the name of the EPC/OC, the “loan name” should be included.
Q: Where I live the economy is opening slowly. If an existing 504 Loan is getting CARES Act 1112 payments, can the CDC grant a deferment when those payments end in October or November?
A: Yes, normal SOP guidelines/requirements are still in effect. Also, a CDC’s unilateral authority is still in effect. Make sure that you document your file.
Q: If the Borrower agrees to the CSA’s 5-year catch-up plan with equal payments and then decides it needs either ratcheted-up payments or a long plan, can the catch-up plan be modified? If so, how?
A: Yes, the CDC should review the request and all applicable information, e.g., financials, business plan, situation, and make a decision based on “prudent lending guidelines.” Will this help or is it a temporary band-aid for a failing business?
A: The CDC would use the same procedure in notifying the CSA and obtaining a revised plan. Remember to document the file.