ValueXpress has partnered with a non-bank SBLC licensed SBA 7(a) lender to originate SBA 7(a) loans nationwide that allow for cash-out proceeds to the borrower for a refinance. The firm has a Preferred Lenders Program (PLP) designation, and therefore, the SBA has delegated credit decisions and servicing to the firm.
Most SBA 7(a) lenders limit cash proceeds to the borrower on a refinance to relatively small amounts of working capital. In the new program, SBA 7(a) loans on a refinance can be up to 75% Loan-to-Value as long as 51% of the loan proceeds is utilized to pay existing debt. The balance of the loan proceeds would be remitted to the borrower.
The loan structure remains the same as any other SBA 7(a) loan. The loan term and amortization is up to 25 years. All SBA 7(a) loans are self-amortizing. The loan is floating rate, based on margin over the prime rate (ranging from 1.0% to 2.75% typically) and adjusts quarterly. The SBA charges the borrower a guaranty fee that can be paid out of the cash-out proceeds. Eligible assets are owner-occupied properties-only in which the owner occupies at least 51% of the property. The prepayment penalty is 5%/3%/1%.
“We expect to do a lot of business cross-selling this product to our existing customer base that owns hotels and self-storage facilities, as these assets are considered owner-occupied by the SBA but are also eligible for CMBS conduit loans,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “ValueXpress has hundreds of clients that have completed cash-out CMBS conduit loans for hotels and self-storage facilities, and we would look to this client base for borrowers seeking cash-out who are not eligible for a CMBS conduit loan.”