While the third-party lender provides permanent, non-sBA financing as part of the project, it is still necessary to provide interim financing. Because 504 loans provide ongoing financing or acquisition financing, an intermediary lender is required for the period between the approval of the SBA and the sale of bonds. Proceeds from the sale of bonds are paid to the interim lender of the amount of Project 504, which it has advanced on an interim basis. Intermediate financing can be provided by the third-party lender or by any other experienced independent source. A copy of the third-party lender`s account or senior linkholder account, which must show that the amount of the purchase or withdrawal is consistent with the restrictions, if any, in the agreement on third-party lenders or a similar agreement on standard fees. The SBA establishes certain provisions relating to intermediate funding, which provide that funding cannot be deducted directly or indirectly from an SBA program. Interim financing terms must be acceptable to the SBA and the source cannot be the borrower`s borrower or partner. If the project is a construction project, the interim lender must have the experience and skills to properly monitor all project payments and progress. If the source of the intermediate financing does not have such a qualification, the SBa may allow the intermediate loan to be managed by a third party, such as a bank or a professional site manager. Note: If the subordination affects an existing third-party lender agreement, the existing agreement must be amended or replaced to reflect the new terms and conditions.
The financing of each SBA 504 project is provided by a development company certified as HCDC and by a “third-party lender.” In most cases, the third-party lender is a financial institution that provides the third-party loan, which typically accounts for 50% of the total cost of the project. However, the SBa does not require the third-party lender to be a financial institution. The SBA defines a third-party loan as “a loan from a commercial or private lender, a federal investor or investor (non-SBA), government or local sources that are part of the financing of the project.” While this is rare, third-party credit could come from an individual or government source. There must be no real or actual appearance of a conflict of interest in the actions of the credit committee, including, for example, a member of the loan committee who participates in deliberations on a loan of 504 for which the lender is the member`s third-party employer or who is otherwise bound to the third-party lender. The applicant acknowledges that the rents or rents paid by the OC to the CBE must not exceed the amount required to pay the loan to BSF and the third-party lender and that an additional amount must be paid to cover the costs of CPR related to the ownership of the property, such as maintenance taxes, insurance taxes and property taxes. With respect to 504 loans, you should ensure that all amounts resulting from the default costs of the third-party loan subordinated to loan 504 by the lender contract 504 are paid to the SBA and not to the third-party lender.