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With SBA Loans On Hold, Lender Describes a Remedy


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In it second week, the federal government shutdown is hitting borrowers of Small Business Administration loans, especially seekers of 504 loans for real estate acquisitions. At least one lender is touting a solution.

“New approvals of SBA loans have been put into a queue, and won’t be able to be responded to until Congress passes a continuing resolution,” reports Alex Cohen, CEO of Liberty SBF, a commercial real estate finance company with an office near Philadelphia and in Newport Beach, California.

“That has a major implication in terms of going on with new approvals, but it also has the potential to cause issues with deals that are scheduled to close,” he adds. He expects the effects to linger after the government gets back to business, because 45 to 60 days typically pass between originating a loan and closing.

Liberty is spreading the word that, like other lenders, it provides interim loans to bridge the gap between a deal’s closing and final loan approval. When the shutdown began last week, his clients weren’t worried because they expected a quick resolution. This week, the number of calls is rising.

“The longer this thing goes out we’ll see more serious inquiries. Once you start hitting the middle or the end of the third week, you may start to get worried,” if you’re a borrower looking to close.

He says interest rates on bridge loans are likely to be a bit higher than usual, given the uncertainty, but eventually rates should return to record lows. “We all feel confident this will be resolved, after some games of chicken by people on the Hill,” he says.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is associate editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is staff writer at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonLaura Michaels is managing editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
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Nancy WeingartnerNancy Weingartner is editor-at-large of Franchise Times magazine and the editor of the Food On Demand media project. You can reach her at 612-767-3200 or at nancyw@franchisetimes.com.
Follow her on Twitter at http://twitter.com/nanweingartner.
 

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