Frequently Asked Questions (FAQs)

• Low down-payment requirements
• Long repayment terms (20 years)
• Projected income is considered as well as historical cash flows
• Collateral may be less critical in loan qualification decisions

Timing depends on the borrower and the ability to deliver financials and cost documents early in the process. A loan package can be done quickly with complete information and documents. CIC routinely meets the demands of a 45-day real estate contract contingency.

There are fees that are required by SBA for every loan that is funded, including an application fee. These fees are 2.65% of the loan and are financed as a part of the loan. Additional servicing fees associated with the loan are reflected in the effective interest rate. There are out-of-pocket expenses related to the loan closing, which is autonomous from the bank closing.

The borrower's out-of-pocket expenses include but are not limited to:

• Recording costs
• Filing fees
• Title insurance premiums
• Hazard insurance premiums
• Flood insurance premiums (if applicable)

• Loans used for the acquisition of real estate typically have a term of 20 years.
• Machinery and equipment loans have a term of 10 years.
• SBA 504 Loans with CIC have a fixed, low interest rate.
• The interest rate is based on a spread over the current market rate for 10-year U.S. Treasury issues and is determined when the loan funds.

Long-term machinery and equipment with a useful life greater than 10 years.

• The minimum equity injection is at least 10% of the total project cost.
• If the project involves the purchase or construction of a single-purpose facility, the required equity injection increases by 5%.
• If the business is new (less than two years old or any ownership change), the required equity injection also increases by an additional 5%.
• If the business is new and the property is single purpose, the required equity injection increases by 10%.

• A second mortgage on the land and building being financed.
• A second lien on any machinery, equipment and/or fixtures that are financed.
• Lease assignments.

An owner’s personal home is not usually required as collateral. In most cases, the project property will be the sole collateral securing a loan. Additional collateral is only required when there is a deficiency in the appraised value of the project property, or if there are other serious credit issues.

SBA requires guarantees from all individuals and legal entities that hold a 20% or more ownership interest in either the project property or the operating company.

• The third party lender financing must be equal to or greater than the loan.
• The loan may not exceed 40% of the total cost of the project.
• The borrower’s injection must be at least 10% of the total project cost, and may be more, as required by statute or for credit reasons.
• No more than 50% of the project costs can come either directly or indirectly from Federal sources.
• Start-up businesses need to be sufficiently capitalized.
• Unsecured personal guaranties from any principal with greater than 20% ownership.
• The borrower is required to meet job creation and/or job retention goals or an economic development objective, as determined by the loan amount.

*For a complete list of occupancy requirements, contact our loan officers.

• The borrower must occupy 51% of an existing building purchase.
• The borrower must occupy 60% of a newly constructed facility, and 80% within three years.

*For a complete list of occupancy requirements, contact our loan officers.

• An annual amortization schedule provided to the borrower will have the accurate information of interest and fees as long as payments are paid in a timely manner.
• 1098 notices are sent to borrowers by January 31 itemizing interest and fees paid for the prior year.
• If you are a borrower and have not receive your notice by the third week of February, contact us.

Unlike standard bank loans, SBA-funded loans follow strict guidelines.

If you are selling the building, a qualified buyer can assume your loan for a $1,000 assumption fee. The pre-payment penalty does not apply in this instance.

Connecticut and Rhode Island.

Contact us via phone or email. We’re here to help you secure financing and succeed.