All Forum Posts by: David H.

@Scott Mac

Hi Scott,

I can’t speak 100% to these specifics, my suggestion is if you have an SBA loan is to start with your lender. I’ll try my best to answer your questions, though your lender may approach this differently.

1. Not sure, I like to think no

2. Typically a full financial review is required however there is much discussion regarding allowing deferments without review as this is a first for the SBA they are still working things out. My suggestion is get proof together, financials, proof of cancellations, etc. Try and demonstrate the economic injury the best you can. Hopefully they make an exception and make it easier, my belief is they will.

3. There is a variety of ways they can structure the repayment of the deferrals. The following are the standard per the SBA SOP

a. Interest may be paid during the deferment period;

b. The deferred interest may be paid in a lump sum at the end of the deferment period;

c. After the deferment period, the loan payment may be increased for a period of time necessary for the Borrower to catch up to the original amortization schedule; or

d. When payments resume, they may be applied first to accrued interest, then to principal.

Good morning everyone!

As an SBA professional I wanted to make you all aware that the SBA has a long standing policy to allow for loan deferments to handle temporary cash flow disruptions, which the Covid19 event qualifies as.

This pertains to all borrowers who have an existing SBA 7a, 504 or Microloan.

Loan deferment can be done unilaterally by your lender. Give them a call now and get out in front of this!

Loan deferments can be up to 6 months P&I. Certain circumstances are different depending on if your loan was sold on the secondary market. If it was, it is still eligible for 90 day deferment and has the potential for more with investor approval.

Many hotel owners and self storage investors utilize this loan products. Start this process now. There will be a bottleneck of requests soon.

@Shawn Skaggs

There LTV is quite high too, others go higher, but the terms at KeyBank were more attractive than a few extra thousand on the line.

FYI, I did 85% LTV total line of $107,000 and there were zero closing costs. They paid for the appraisal and everything.

@Shawn Skaggs

KeyBank has a very strong HELOC for the primary residence.

I got one late last year for Prime -0.25%, which is effectively 4% today.

The structure is 15 years interest only and then it terms out for 15 years

Throughout the life of the loan you have the option to term out a portion of your balance and lock it into a fixed rate. Good to do if you use it for a large down payment and you see the rates rising. Probably won’t be seeing that for a couple years but it’s nice to have the option.

@Jaron Walling

Haha nice!! Congrats on the move and best of luck getting the HELOC and renovations done!

@Jaron Walling

The bank does not care if you blow it on a sports car. You can literally transfer the funds to your checking account and gamble it all away. I don’t suggest that. But you could.

The one restriction is they want you to stay living in the property for a full year after the line is opened. So, if you are investing in a new primary residence, it may be best to wait a year. That being said, I don’t think it’s heavily scrutinized.

I’m using it for an investment property. I used the funds for part of the down payment and for the rehab. I will be eventually moving into this property as my primary for a year to maximize the house hack.

Just be sure to read the fine print on use of proceeds as I’m sure each lender is different.

@Jaron Walling

In October I got a HELOC on my primary with Key Bank at Prime - .25% so today I'm sitting at 4%, which I'm very happy about.

Key has good options too like converting the line into a fixed term loan if need be. May be worth it if the prime rate drops further if you want to lock in the rate. I’m not going that route yet nor do I plan to, but I like the option.

Also, for reference, my term is 15 years interest only then 15 year term out

@John Underwood

Hi John,

As an SBA professional I can say that there is still much uncertainty as to how these funds will be allocated.

Traditionally, SBA loans are not eligible for passive rental businesses.

(They are however available for hotels and self storage, loops holes!)

As far as I’ve seen, no SBA lenders lend on AirBNBs, though, I may be wrong, because each institution interprets the rules differently until they are reprimanded and told otherwise.

In regards to the current situation at hand, it appears as though the government has already started bending the rules of the program. We have been told that loans will be eligible for non-profits, which are historically not allowed. This leads me to believe the rules may be bent further.

It definitely wouldn’t hurt to try, as I feel there will be very loose standards and oversight as this is rolled out.

Also, if you are in the hotel or self storage business, look into your options for loan deferment, as it stands the SBA is allowing lenders to defer up to 6 months of payments for eligible businesses. Qualifying what is eligible however is guesswork at this time.

Good luck!

@Mason Jeffries

I provide washer and dryer in two of my units and will be doing so in a 3rd.

I believe it has helped justify charging at least $50 maybe even $100 more in rent (2br 1 ba $1850) hard to say for sure though.

For my 3rd unit I have decided to purchase the washer dryer off of Craigslist. I got a high end set less than a year old from a young couple who moved to the area but it didn’t fit in their apartment. I paid $500 for the set (each were $700 new). They work, and even if one didn’t it would be less expensive if the other still worked. Worth the gamble in my opinion. Plus I’ve seen sets for the basic GE or Amanda’s for $200 quite frequently. The same Amanas I’m kicking myself for buying new two years ago. Buy used, plus you can say your saving the environment :)

@Jeremiah Samuel

Technically yes. Some SBA lenders will finance certain existing businesses CRE at 100% LTV through the SBA 7a program.

This is a common misconception that the max is 90%. That maximum applies to business acquisitions, and technically, you could finance 5% with a seller note bringing you up to 95% LTV in such a situation.

It will really come down to the bank/non-bank lender who is actually doing the loan.

I believe LiveOak Bank is doing 100% LTV on dentists and veterinary businesses.

It’s going to be rare to find a bank willing to do this, try LiveOak Bank, already own your business, and have strong credit and patience lol