SBA 7a Loans and Syndication Hiccups

[Sam Wilson]

Here's the dilemma. We are building a small boat and RV storage facility. A 2mm build. The lenders are all local banks, who suggest we use the SBA 7a program. Typically in a syndication, if the GP and LP are separate LLC's, then the LP will hold title to the asset. However, in this scenario, the SBA wants to underwrite all members of the LLC that holds title and have them be guarantors. I would not invest in a syndication where I had to be on the loan and be underwritten. No way.

Our syndication attorney suggested we create a special purpose entity that holds title, with the members of the SPE being the LP and the GP as managers.

But that is just creating more paperwork I think, because once the SBA sees the SPE holding title and the members being another LLC, they will just want to underwrite the members of the LP LLC again.

I am stuck with this project and cannot figure out a way to get the correct pieces in place to move forward. 

The local banks don't want to finance it because it's just simply too big for what a lot of these 2 branch banks take on. We have to go SBA in the area.

1) How can we get the LP to hold title

2) Underwrite only the GP members as guarantors

3) Use the SBA program

?? Any thoughts?