The deadline for SBA 7(a) loan submissions under the Small Business Jobs Act of 2010 for non-Preferred Lenders Program (PLP) lenders was 11:00 p.m. EST on December 15, 2010 for lenders using E-Tran. In what seems par for the course, ValueXpress and its partner banks — Country Bank based in New York and Guaranty Bank based in Mississippi — received four loan applications during the week of December 6 totaling almost $15 million . . . and all were predicated on a 90% guaranty and a waiver of the guaranty fee under the Small Business Jobs Act of 2010.
“Some would have been paralyzed by the situation, but I thought it was a great opportunity to get stuff done,” said Michael D. Sneden, Executive Vice President at ValueXpress. “We have been harassing our borrowers for months to get their applications in for processing to no avail. The impending deadline finally got them off the sidelines and moving.”
ValueXpress worked pretty much non-stop 12-14 hours a day beginning December 8, when Jim Brett, senior underwriter at ValueXpress, took a car service from the Manhattan-based ValueXpress office to meet a borrower in central New Jersey and pick up 18 inches of paperwork. At the same time, Sneden visited property in the Red Hook section of Brooklyn, NY for this first transaction, the purchase of an 81-room Quality Inn hotel. This $5-million transaction was underwritten and submitted on December 10. Next, ValueXpress turned to two additional hotel transactions that were complicated due to a change of ownership. The Small Business Administration (SBA) requires a thorough valuation be completed to support the proposed consideration amount when there is a change of ownership. ValueXpress completed 15-page reports for each property to support the proposed price for the purchase of the remaining ownership interest that the guarantor did not already own. These two deals, $3.5 million and $5.0 million, respectively, were submitted on December 13, 2010. All three deals were sponsored by Country Bank.
“Just when Mike thought he was through, I hit him with another transaction,” said Jay Bhakta, a senior loan originator located in the ValueXpress Jackson, MS office. “The transaction was straightforward on the surface, the construction of a mostly owner-occupied retail building located in Vicksburg, Mississippi,” explained Bhakta. “But when I mentioned to Mike that there were four operating company co-borrowers and that the guarantors owned 30 affiliated companies, I was met with dead silence on the other end of the phone line.”
“Okay, so there we were on December 13, 36 hours away from cutoff, and we had to obtain 90 tax returns, 30 interim financial statements and debt schedules, and write the deal up,” said Jim Brett, senior underwriter at ValueXpress. “I told my wife I would see her in a couple of days.”
Bhakta got out his scanner and went to the borrower’s accountant’s office in Jackson, MS and starting scanning documents, while interim financial statements and debt schedules were completed. ValueXpress uploaded 130 files to the SBA through E-Tran at 7:00 p.m. on December 15, 2010, four hours before the SBA deadline.
“Mike even got home in time to watch the Giants demolish the Vikings,” said Brett. “Meanwhile, I got bronchitis and could barely breathe.”