These questions should give you a good understanding of how to avoid needless expense and aggravation in the commercial loan process.           1.   Does the lender require any up-front application fee before issuing a written commitment letter?           2.   What will be the procedure for ordering appraisals and environmental reports?           3.   Will the written commitment be specific as to loan amount, rate, term, collateral requirements and other major conditions?           4.   Does the Lender have "PLP" status in locality where the project is located?           5.   What sort of processing and approval procedure for the loan application should I expect?                                 1.   Does the lender require any up-front application fee before issuing a written commitment letter? Most lenders do not charge an application fee for considering a loan request. If your lender requires a fee, be sure to get something in writing about how and when the fee will be refunded. If the fee is not refundable under any circumstances, you might want to consider looking for a different lender.           2.   What will be the procedure for ordering appraisals and environmental reports? A property appraisal and environmental report generally are required for commercial mortgage loans. But most lenders will not require payment for an appraisal or environmental report before a commitment is issued. Instead, the loan commitment will be conditioned upon these reports being completed before closing. Because these reports can be costly and time-consuming to obtain, you should be wary of a lender that requires payment of these items before issuing a written loan commitment. If you have an old appraisal or environmental report, you also should ask the lender if the same firms could be employed to prepare the new reports. Often this will save time and money because the firms already are familiar with the property.           3.   Will the written commitment be specific as to loan amount, rate, term, collateral requirements and other major conditions? Once the loan application is approved, the lender will issue a written commitment. The written commitment should be as specific as possible regarding all loan terms. Although there may be some conditions that the borrower must meet before closing (for example--appraisals, insurance, title reports) all of the major terms and conditions of the loan should be spelled out clearly in the commitment. Sometimes a lender may issue a document that looks like a loan commitment but does not bind the lender to make the loan. Then the lender later can change the interest rate, term or loan amount at its own discretion. This can be disastrous for a borrower who has depended upon receiving a certain loan amount with certain terms. Make sure that your commitment is truly a binding agreement and make sure that you understand under what circumstances the lender can change the loan terms.           4.   Does the Lender have "PLP" status in the locality where the project is located? Some SBA lenders are given “preferred”-- “PLP” -- status from the SBA. This is because the lender has demonstrated excellence in the SBA program. As a borrower or a borrower’s representative, you will benefit from dealing with a “PLP” lender. The approval and closing process will generally be much faster with fewer surprises. Before you deal with any SBA lender, find out the answer to this question.           5.   What sort of processing and approval procedure for the loan application should I expect? One of the frustrating aspects of any loan application is not knowing what time frame you should expect for the application approval and closing. Ask the lender to give you a realistic time line for the application, approval and closing process. Make sure that you understand this time line and that it complies with your business and contractual deadlines. Also, use common sense. If a lender tells you that your loan can be approved and closed within a very short time, ask for a reference from a recent borrower whose deal closed within that time frame.               Home - Loan Programs - Success Stories - The Fine Print - FAQs - Contact Us             Copyright ©2006 Southeastern 1st Financial. All rights reserved.