ValueXpress closed on a $485,000 first-mortgage loan commitment with its affiliated bank, Country Bank. The loan, an SBA 7(a) loan, was approved based on the SBA’s approval of a 90% guarantee under the Jobs Act program. The transaction was approved on a floating-rate basis with a 6% start-rate and a cap of 9.75%, the rate the borrower was paying on its prior loan. This way, as long as the rate stays below 9.75%, the borrower will save relative to the old loan.
The borrower, a dentist, owns a 1.5-story medical office building that was originally constructed in 1951 (gut renovated/converted in 2007). The facility, located in Bergen County, NJ, contains 3,100± square feet of gross building area that is in very good overall condition.
Once the transaction was committed, Country Bank obtained an environmental report that indicted that an underground heating oil tank may have been abandoned on-site, and after additional research, the probable location of the tank was found. A contractor was hired to excavate and remove the tank, but on excavation, it was discovered that the tank had leaked and contaminated the soil.
“We then began assisting the borrower in remediation, collecting bids for soil removal and helping the borrower apply for reimbursement from a State of New Jersey remediation program,“ said Michael D. Sneden, Executive Vice President at ValueXpress. “In addition, we petitioned the SBA to extend its commit to preserve a 90% guarantee and fee waiver until December 31, 2011 and the SBA concurred.”
After Jim Brett, senior underwriter at ValueXpress, said, “Closing this transaction was like pulling teeth.” he was promptly thrown out of our office for making a bad joke.