My SBA FAQs
Even though I work for a company that provides SBA 504 loans, I am frequently asked about SBA 7a loans, particularly as many area lenders no longer have an SBA expert in-house. So I thought I would start a blog of frequently asked questions. This will include 504 and 7a and hopefully I'll have the stamina to update this regularly, starting now!
I'll state upfront the standard disclosure that every deal and circumstance has it's own nuances and to think about the "big picture" not just the singular question.
June 27, 2022 - Primary Residence as Collateral
Q: If the bank takes a lien on a principal's primary residence, what happens if they want to move in a year?
A: Funds from the proceeds of the sale of the home would be escrowed to be used towards the acquisition of the new property with a new mortgage to secure the original loan.
Big Picture: The timing of the replacement secondary mortgage can be tricky as most "conventional" mortgage lenders look at the overall loan to value. The primary lender may need to portfolio the new mortgage as a second SBA mortgage in the amount of the business loan (or 125% of the equity) may impair LTV requirements if they sell their residential mortgages.
Note: The 504 program rarely requires a lien on personal residence to secure guaranty of principal.
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ReplyDeleteI really enjoyed reading this FAQ post because it breaks down SBA-related questions in a simple and practical way. Many people struggle to understand financing terms and loan processes, so content like this is genuinely helpful for both beginners and experienced borrowers. I especially liked how the explanations were straightforward without being overly technical. In today’s market, comparing financial options carefully is more important than ever, whether for business funding or personal property purchases. Even when researching mortgage rates Singapore, clear educational resources like this help readers make smarter financial decisions. Thanks for sharing such informative and easy-to-follow insights. Keep up the great work!
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