All Forum Posts by: Sean McCluskey

Honestly SBA can interpret the rules as it sees fit, just like IRS. So nobody is absolutely sure what rules SBA will place on EIDL loans. What I do know is following:

1) UCC is on the LLC, not on any specific property, so it should not affect any existing mortgage. Think of EIDL loan as any other loan. Let's assume you purchase a new property with new mortgage, your new mortgage will NOT affect previous mortgages as the banking system assumes the institution who give you the latest loan should make sure you have capability to pay all loans off. Your previous mortgage providers assumes SBA did its due diligence when hand you the EIDL loan.

2) EIDL loan will affect your future borrowing power as it increases your debt ratio. Next lender will including it in its calculations for your next mortgage.

3) Lease/sale of existing properties will not be affected by SBA as this is just normal business transaction for the LLC.

4) You can not close the LLC with the EIDL loan still outstanding. Likely this will trigger an audit from SBA.

3) is the one SBA can always change with a new rule/interpretation. However, government agencies tend to take the lazy way out, so unlikely to add rules that will drastically increase its workload. This is why PPP caused huge uproar when SBA loaned PPP money to large corporations (who has LLCs or subsidiaries that are small) - it happened because SBA got lazy and did not bother to check the corporate structure. Once there was an uproar, it immediately changed rules and forced some of the large corporations to pay the money back.

0 Votes

@Phillip Rosin what program do you use to make these drawings? I love it

1 Vote

What I'm reading says that an UCC-1 is a standard form of lien for a business financing transaction, and also that it is normally in SBA loans.

I am also reading that the EIDL is not attaching to real estate collateral. So if you're a sole proprietor applying for an EIDL, that would mean that its a general UCC-1 w/o specific collateral, and not attached to your real estate assets (rental properties).

I am not an attorney.

UCC Filings

UCC Filings 2

EIDL UCC-1

Another link

1 Vote

Dear @Andrew Postell,

I'd just like to say, my dear sir, that you are The Boss.

Thank you so much for all of your help!

Sincerely,

Sean & The Rest of the Biggerpockets Community

1 Vote

@Andrew Postell What should I do if I made my lien too small? For example, I bought a house for $100k and set the lien at $125k, because I knew that would cover my rehab costs.

But now the ARV is $180k, and lenders are pretty strict on cash out refi's. Can I adjust my lien somehow, to make it 75-80% of the ARV ($135-$144k)? Would I file a payoff and a new lien of the new amount?

2 Votes

@Jeremy Davis @JD Martin has the most practical reply. When I decided to move from Boston to Southern California, I would fly out here every other week to network and have interviews, while my wife and two kids stayed home.

Once I had my job offer, we rented for a year, and then had a cosigner for a mortgage.

The cosigner will help cover the lack of a 2 year employment history.

The idea of moving and buying immediately, before having employment, is really an unnecessary constraint that you're placing on the situation. How would you even know where you wanted to live in the new market?

2 Votes

@Snehann Kapnadak Best outside the box way, have a cosigner who qualifies. Or someone in your network who is working in that market, and split the deal.

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@Andy Nathan I have 7 people on the waitlist for a rental that is coming soon (<2 weeks) at $200/mo more than my original model assumed.

4 Votes

@Matt Mason I don't think that really matters if you are able to get a guaranteed return inside the retirement account (interest rate) and also use the money to make a return in your taxable accounts (like a BRRRR).

0 Votes

@Tadela Tedemet wow youre flippingvto a $55k ARV? Definitely don't do that extra work, at that level. Paint, carpet, safety items, and you're done.

4 Votes

All Forum Posts by: Sean McCluskey

Sean McCluskey has started 15 posts and replied 214 times.

Post: SBA EIDL Loan Terms | Is It Worth It For $25K+?

Post: How would you rehab this kitchen?

Post: SBA EIDL Loan Terms | Is It Worth It For $25K+?

Post: How To: Cash out 1-4 unit Property

Post: How To: Cash out 1-4 unit Property

Post: How do you quit your day job if you need a job to get a loan?

Post: Prequalification for Househacking When Unemployed?

Post: What is a small win you had in real estate investing this week?

Post: Eliminate High Interest Mortgages

Post: Contractor gone wild!!! Help!?