My SBA Loan Pro Podcast Ryan Smith

Seldom are surprises welcomed when applying for an SBA loan to acquire a business, execute a change of ownership or purchase real estate. 

In fact, surprises usually mean a change in terms which may affect the loan's outcome or desirability. 

The official term for this phenomenon is Retrade. 

The term retrade simply means the practice of renegotiating the terms of a transaction after the initial price and terms have been agreed upon.  Unfortunately, SBA lenders are also prone to retrade which may come as a surprise and to the dismay of loan applicants.

Let’s explore when and why a Retrade may occur during the loan application process and more importantly how to avoid them. 

First, we must understand the order of events when applying for an SBA loan.

After submitting a complete loan package it is customary for the lender to issue a Term Sheet also called a Letter of Interest. 

There are three types of Terms Sheets


A term sheet printed upon demand by an inexperienced Business Development Officer without any prior due diligence performed


A term sheet printed on demand by an experienced Business Development Officer with credibility within organization


A Term Sheet approved by a Credit Manager or Chief Credit Officer



It’s easy to understand the veracity of a Term Sheet improves and the likelihood of experiencing a retrade diminishes with more due diligence and higher scrutiny. 

However, take note that Wall Street banks, seen on every corner, are notorious for retrading at any point during the loan application process, even right up to the point of signing loan documents.  

The reason for this phenomenon may be attributed to inexperienced Business Development Officers, decentralized credit decision making authority and an abundance of obscure lending policies unknown even within the organization until after a loan is formally underwritten and reviewed by a credit manager. 

As a rule, I require all of my portfolio lenders to perform a minimum acceptable level of due diligence that includes reviewing the Term Sheet with a Credit Manager or when possible a Chief Credit Officer, significantly minimizing the likelihood of a retrade. 

Further, I require my clients and lenders to speak prior to submitting the loan request to formal underwriting so the lender can confirm the due diligence performed up to that point in an attempt to avoid any surprises including a retrade. 

I have only experienced three retrade events since founding ThinkSBA in 2019. Two of them by Wall Street banks with a decentralized underwriting center and one due to the need to mitigate unsatisfactory personal liquidity at the time of loan committee. Incidentally, all three loans closed.

As I have demonstrated, the most effective way to avoid a retrade is to require a minimum acceptable level of due diligence and scrutiny and knowing which lenders have a higher or lower propensity to change terms after issuing a Term Sheet. 

Good news for my clients is that I consider avoiding surprises and or retrades as my job. Therefore, I take pride in the thoroughness of my process and never take my clients' desired outcome for granted.

Remember, I’m with my clients from start to funding.



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⁠https://mysbapro.com⁠ - My SBA Loan Pro Podcast

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⁠https://thinksba.com/faq⁠ - Frequently Asked Questions

⁠https://mysba.pro/page⁠ - Google Business Page & Reviews

⁠https://mysba.pro/cal⁠ - Schedule Call

All self funded searchers pursuing ETA, listen up. This podcast episode contains a comprehensive overview of the acquisition process including the following topics.



After listening to this episode you will be equipped with the tools and information to make better decisions on your journey.




Sell Seller
Legal Team
Landlord
Financing
Business Transfer



Want more? Access our resources on your terms!

https://mysbapro.com - My SBA Loan Pro Podcast

https://thinksba.tv - YouTube Channel Subscribe For New Content Weekly!

https://thinksba.com/faq - Frequently Asked Questions

https://mysba.pro/page - Google Business Page & Reviews

https://mysba.pro/cal - Schedule Call

The SBA has published updates to the Standard Operating Procedures manual replacing SOP 50 10 6 with SOP 50 10 7.  These updates will become effective August 1, 2023.  There has been much debate when and how lenders will implement these updates. The short answer is we’ll have to wait and see.

For now it’s enough to understand the enormous changes that have taken place and how searchers, entrepreneurs and business owners will benefit.

The reason I’ve waited to publish this information on The MY SBA Loan Pro Podcast until now is to let the dust settle and provide feedback from real world scenarios.

This episode will focus on the following updates:


The “So Called” Long Winded Statement


A Standard Loan Vs a Small Loan


Full Change of Ownership 


Partial Change of Ownership


Franchise Directory


Personal Resource Test


Life Insurance



Ryan is always available to speak with his loyal podcast listeners. Please schedule a call via https://mysba.pro/cal to get started today!



Other Resources

ThinkSBA.tv

ThinkSBA.com

MySBALoanPro.com



Ready to Apply?

Visit ThinkSBA.com/apply

Welcome to another episode of the My SBA Loan Pro Podcast: SBA Loans Industry Update May 1, 2023.



In today's episode Ryan will cover the following topics:


Lender Appetite
Interest Rates
Upcoming SBA Rule Changes
SBA Behind The Curtain: Everything you need to know about SBA lending that you never knew to ask



Remember to subscribe to this podcast to be notified when new episodes are available.

Also, please subscribe and turn on notifications to be notified of new video content on our YouTube Channel www.thinksba.tv.





Additional Resources

Visit our website: thinksba.com

Schedule a call with Ryan: https://calendly.com/thinksba

Complete our online loan inquiry form: https://thinksba.com/small-business-loan-submission-form/

FAQ: https://thinksba.com/faq/

In this episode, your SBA Loan Pro, Ryan Smith covers the following SBA Financing Topics:


Access to capital
Types of transactions being financed
Lender processing times
Current 7(a) & 504 loan interest rates
Interest rates for prime borrowers
Bonus Content - Behind The Curtain of SBA Financing

Contact Ryan at (858) 762-2774 or visit thinksba.com for more information or to get the application process started today.

Residential Care Facilities for the Elderly (RCFE’s) have become the housing model of choice for our senior population and their loved ones due to the fact that many require increased accessibility, social connectivity, and medical support services that living at home simply cannot provide.

As the name implies, RCFE’s, also called assisted living facilities, are often located in suburban residential neighborhoods.

Many of these assisted living facilities are permitted to house between 6 – 16 senior adults. As a result, buyers and sellers are often represented by residential real estate agents and brokers who are only familiar with residential mortgage financing.

Though residential mortgage financing will suffice when acquiring unconverted residential property it does not when the loan purpose includes ground up construction of a new facility, refinance or acquisition of an existing facility.  This makes finding the right financing difficult. That is why it’s important to align yourself with an expert.

In an RCFE sale transaction, both sellers and buyers should take note of the following qualifying criteria:


Whether the buyer is able to demonstrate direct or equivalent experience which qualifies them to own and operate an RCFE per bank guidelines.
The process to re-license an RCFE with a new owner, operator and how that can affect the escrow close date.
How the appraised value is determined for purchase transactions, refinances and ground up construction and the impact to down payment percentage requirements.
When a Phase 1 Environmental Report is required and when it is not.
How to calculate and identify use of square footage to qualify for prime lending rates and terms.
Whether the level of medical support services offered at the facility qualifies for prime lending rates and terms.

Loan Terms Available For Qualified Borrowers whether ground up construction, refinance or acquisition includes.


Minimum 15% equity injection allowing entrepreneurs to keep more capital in reserves for strategic growth and unexpected expenses.
Loan closing within 45 – 60 days to meet the demands of escrow.
Requesting working capital to meet the demands of short term operating expenses after the transaction closes.
Reasonable interest rates and up to 25 year amortization period for easy monthly payments.
Flexible pre-payment penalties giving business owners the power to payoff their loan on their terms.