Lending Power | Loan Programs & Leadership for small business

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SBA 504 Current Rate:

4.596%

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Funding Requirements

 

Knowing What’s Required

Being familiar with the closing requirements of a CIC 504 Loan will help pave the way for a smooth CIC 504 Loan closing and funding.

 

Financials

CIC requires interim financial statements dated within 120 days of the CIC closing, which include:

  • Profit and Loss Statement
  • Balance Sheet
  • Accounts Receivable Statement
  • Payables Aging Statement
  • Most recent tax returns for the operating company and all guarantors if not previously available.

 

Insurance

All required insurances, outlined in the Authorization for Debenture Guarantee, must be obtained and presented at closing with the following clause:

CIC and/or US Small Business Administration


2315 Whitney Avenue, Suite 2B


Hamden, CT 06518 ISAOA ATIMA

 

Life Insurance

DELAY ALERT – When an Assignment of Life Insurance is required, the Assignment must be acknowledged by the main office of the insurance company and a copy of the entire life insurance policy must be obtained and submitted with the fully executed assignment at the CIC closing. This requires sufficient lead time for the insurance company to process and complete the Assignment request before closing.

Download CIC’s Life Insurance Assignment Form; however, most life insurance companies use their own form, which is acceptable.

 

Borrower’s Equity Injection

CIC must prove the borrower’s required equity injection:

  • If the equity was/is from personal liquidity, three months of personal bank statements will be required.
  • If the equity injection was part of the land purchase transaction, a signed and certified copy of the closing statement will be required.
  • If the equity injection paid project costs, copies of invoice(s) and the coordinating cancelled check(s) will be required.

 

Proving Project costs 

CIC is required to verify all project costs.  This is the one aspect of the funding process where Third Party Lender participation is required for projects with construction components.

  • Once the construction/renovation is complete, the Third Party Lender must submit a bank disbursement file to CIC outlining the disbursement of their loan proceeds for ground-up construction or major renovation projects.
  • CIC must be able to reconcile the project costs using the disbursement file together with any other back-up documentation prior to closing the CIC 504 Loan.

Important Practice Notes: 

  1. Using the AIA Form G702 or similar disbursement tracking for ground up or major renovation projects makes CIC's pre-closing cost reconciliation process much more efficient.
  2. CIC may only include eligible items when calculating total project costs. If CIC discovers an ineligible disbursement it is usually under "Soft Costs".  Unsure whether an item is fully eligible? - Call CIC.  
  3. The project cost allocations in the CIC 504 Loan Authorization can be amended prior to closing based on the results of the disbursement record reconciliation. the borrower is not locked into its original cost estimates provided at the time of approval.

CIC is an economic development lender contributing financial expertise and practical guidance to small business entrepreneurs in Connecticut and Rhode Island who have powerful ideas and need more power to grow them.