SBA reviews four areas before a 504 loan is fully approved. It is highly recommended the participating lender wait before disbursing their loan proceeds until FDDC and SBA have reviewed and approved all four of the items listed below.
Franchise / Membership Agreement Approval
If the SBA 504 loan applicant is a party in a franchise, license, cooperative membership or dealer agreement the agreement must be reviewed by SBA prior to consideration of any credit application. SBA maintains a franchise registry listing all agreements reviewed and approved. Loan applications which involve a previously reviewed franchise agreement enjoy faster processing time by SBA. If the agreement is not on the registry, it will need to be reviewed by SBA individually.
Credit Approval
After all application documents are received and questions answered, FDDC packages the 504 credit application. FDDC’s Board of Directors reviews and approves each loan request before forwarding to SBA for approval. FDDC schedules Board meetings as needed to insure timely processing of applications.
Appraisal Approval
SBA requires an appraisal on real estate if the estimated value of the project property is greater than $250,000. The appraisal must be dated within one year of the SBA application date and in addition to addressing the third party lender, must be addressed to FDDC and SBA. Appraisals are also required on used equipment if it is part of the project.
Environmental Approval
If the 504 project involves real estate, SBA will require an environmental investigation be completed. Contact FDDC to determine what level of investigation needs to be completed. The environmental report must be dated within one year of the SBA application date and be addressed to FDDC and SBA.