SBA7(A)

SBA guaranteed loans can be used to purchase or improve owner-occupied commercial real estate, leasehold improvements, machinery and equipment, fixtures and furniture, inventory, and other business assets; to provide working capital; to refinance certain debt; to purchase a business; and to pay loan closing costs

SBA-guaranteed loans funded by Arkansas Capital Corporation range from as small as $50,000 to a maximum of $5,000,000. Loans in excess of $5,000,000 are not eligible for an SBA guarantee.

SBA-guaranteed loans funded by Arkansas Capital Corporation carry floating rates, up to 2.75% over the Wall Street Journal Prime rate, adjusting every calendar quarter.

Up to 25 years; SBA loans are fully amortizing over the life of the loan without balloon or demand features. The term offered is based on the use of the loan proceeds. Terms for asset categories are as follows:

• Real Estate — up to 25 years

• Working Capital —up to 10 years, depending on the borrower’s ability to repay

• Machinery & Equipment — based on the useful life of the asset

Prepayment penalties will apply for SBA 7(a) Loans with maturities of 15 years or more. The penalty applies to the first three years of the loan: 5% year one, 3% year two, 1% year three.

• A SBA Guaranteed Loan requires a one-time fee based on the dollar amount being guaranteed.
• Loan maturity of 12 months or less = .25% of guaranteed portion Loan maturities over 12 months (depending upon gross loan amount, as follows):
  • Gross Loan $150,000 or less
  • 2.0% of guaranteed portion $150,001 – $700,000
  • 3.0% of guaranteed portion $700,001 – $5,000,000
  • 3.5% of guaranteed portion plus 0.25% for the guaranteed portion over $1,000,000
• The SBA application packaging fee may range from $1,250 to $3,500.
• Consumer and business credit reports, , income tax verification and initial environmental screening — up to $650.00.

Loan fees may be financed in the loan. Your Good Faith Deposit will be used to offset loan underwriting, as well as packaging and closing expenses. However, appraisals and environmental expenses are not included in your Good Faith Deposit and are collected separately prior to the engagement of any such professional services.

Loans must be collateralized to the maximum extent possible up to the loan amount. If business assets do not fully secure the loan and personal assets are available, they must be pledged as additional collateral to secure the debt.

All principals who own 20% or more of the business are required to provide a full guarantee. Principals or key managers owning less than 20% may be required to provide a guarantee on a case-by-case basis. When necessary to secure a collateral position, Arkansas Capital will require the guaranty of a non-owner spouse to the extent of the spouse’s interest in the collateral. The guarantee of affiliated companies may also be required based on the percentage of ownership of the affiliate and the borrower’s relationship with the affiliate.

A minimum historical or projected debt service coverage ration of 1.15 is required.

Loans can generally be made to all for-profit small businesses except those that do not meet SBA eligibility requirements, such as: businesses engaged in lending, loan packaging, investments, pawn shops, passive real estate investments, life insurance companies, small businesses located in a foreign country, pyramid plan sales, gambling, businesses which restrict patronage or promote a religion, cooperatives, non-profits, or individuals of poor character or on probation or parole.

Evidence must be provided by the applicant prior to any loan closing and disbursement.

Standby creditor must subordinate any lien rights in collateral securing a loan to the lender’s rights in the collateral and agree to take no action against applicant or any collateral securing the Standby Debt without lender’s consent.

Required for all Real Estate purchased or used as collateral.

Required to substantiate the value of any used machinery and/or equipment.

Required for all Real Estate purchased or used as collateral.

A late charge (not to exceed $100) in the amount of five percent (5%) of the amount of any payment which is not made within ten (10) days of the date the payment is due will be collected from the Borrower.

Arkansas Capital must document that the borrower used the loan proceeds for the approved purposes.

Property insurance (fire and theft, extended coverage and liability) will be required. All personal and real property shall be insured for replacement cost. Insurance coverage for improvements to real property must contain a Mortgagee Clause in favor of lender. Insurance coverage for personal property must contain a Lender’s Loss Payable Clause in favor of lender. Additionally, the policy must provide written notice at least 10 days prior of policy cancellation.

The key principals of the operating company may be required to provide an assignment of life insurance in the amount of the loan.

Will be required if the property is located within a flood area.

Will be required in amounts meeting state law requirements.

Arkansas Capital must verify the applicant’s last 3 years (unless applicant is a start-up business) of tax returns submitted to IRS via IRS Form 4506-T.

Lease(s), including options, on all business premises where collateral is located should be for as least as long as the term of the loan.

A perfected assignment of all rents paid under a lease between an Eligible Passive Concern (Real Estate Holding Company) and the applicant Operating Company is required.

Applicant must provide lender access to any leased premises and facilities where collateral is located with an executed Landlord’s Waiver.

Evidence of compliance with the “National Earthquake Hazards Reduction Program Recommended Provisions for the Development of Seismic Regulations for New Buildings” (NEHRP) or a building code that has substantially equivalent provisions is required.

Construction or Installation of Machinery & Equipment: Except under special circumstances, will not be permitted.

Applicant must show ability to pay cost overruns, if any.

Applicant must provide lien waivers or releases from all materialmen, contractors, and subcontractors involved in any construction.

• Existing Real Estate Improvements occupy at least 51% of the property.
• New Construction occupy at least 60% of the property.

All franchised operations not listed on the Franchise Registry must pass a legal review of the applicant’s Franchise Agreement and Franchisor’s Disclosure Statement.

Certification from applicant that any required child support is no more than 60 days delinquent.

Applicant must be current on all federal, state, and local taxes, including but not limited to income taxes, payroll taxes, real estate taxes, and sales taxes.

A Good Faith Deposit (see below schedule) shall be required and applied to Six Bridges Capital Corporation’s processing fee and other costs associated with credit investigation and underwriting. If approval is not obtained, the Good Faith Deposit shall be refunded (less the cost of credit verification, environmental screening, IRS filing verification and any other out of pocket expenses incurred by 6BCC).

• $2,500 SBA 504 Debentures of $500,000 and less
• $3,500 SBA 504 Debentures of $500,001 to $999,000
• $5,000 SBA 504 Debentures of $1,000,000 and over

Neither the Borrower nor Operating Company has been determined by the Secretary of Homeland Security or the Attorney General to have engaged in a pattern or practice of hiring an alien, recruiting an alien or referring an alien for a fee for employment in the United States, knowing that the person is an unauthorized alien.