Commitment Letter

As a best practice, 1st REM/UCC lenders must include the following information in their commitment letter for a 504 project:

1. The physical address of the 504 project property;
2. All collateral to be required by the 1st REM/UCC lender, including guarantors and assignment of life insurance, if any;
3. The actual dollar amount of the 1st REM/UCC loan, not just the percentage amount; and
4. The interest rate for the entire term of the 1st REM/UCC loan, not just the initial rate.

Providing this information in the bank commitment letter (see sample provided below) will assist SBA and 6 Bridges Capital Corporation (6BCC) with providing both the bank and applicant with a quicker approval process.

SBA 504 Loan Product

Date
Name of 6BCC contact
Six Bridges Capital Corporation
200 River Market Avenue, Suite 400
Little Rock, AR  72201
RE: Name of Operating Company Applicant
Address, City, State

Dear [name of 6BCC contact]:

[Insert Name of Lender] has reviewed the borrower’s application for a $ [insert total project amount] loan for full project financing for the [insert project components such as purchase, improvements, construction] of the [real estate and/or equipment] located at [insert address, city, state]. This Bank is not in a position to meet the borrower’s request for full project financing at this time as [insert reason, such as, “the loan maturity exceeds our credit policy”]. To the best of our knowledge, financing of the total project cost is not available at interest rates and terms prevalent in our community.

[Insert Name of Lender], however, is willing to participate with Six Bridges Capital Corporation in the SBA 504 loan product to benefit [Insert Name of applicant].In this connection, the Bank’s $[insert amount of TPL loan] [insert % of Project Cost] would have an interest rate of [insert complete interest rate, not just the initial rate]. The note will be for a term of [insert term] to be amortized over [insert amortization period].

The project is located at [physical address of project property]. The bank commitment is contingent upon the collateral and guarantors listed below:

List third party lender collateral requirements

List guarantors for third party lender loan and any assignment of life insurance

In addition, [Insert Name of Lender], is willing to provide an interim loan in the amount of $ [insert amount of interim loan] [insert % of the Project Cost] to be repaid from the proceeds of the debenture sale. This interim loan is to be secured by a [insert lien position] on the subject real estate. In addition, the SBA approval of this loan is conditioned upon the receipt by SBA from Bank of a one-time participation fee equal to one-half of one percent of the principal amount of the Bank loan attributable to the 504 project that is senior to SBA. [Optional: This is conditioned on the final Bank approval as well as the approval by the Small Business Administration.]

Sincerely,
Name of Lending Official
Title