Commercial Loans Blog

SBA Loans on Assisted Living Facilities

Posted by George Blackburne on Mon, Sep 10, 2018

Assisted Living FacilityI learned something today.  A $1.1 million commercial loan on an assisted living facility was entered into this afternoon.  With a hope and a prayer, I forwarded the loan application by hand to one of our SBA lenders, even though the borrower didn't specifically ask for an SBA loan.


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I reserve the right in our Terms of Use to forward deals by hand to lenders that the borrower might not have considered.  For example, maybe the borrower had never thought of an SBA loan for his assisted living facility.

Not surprisingly, my lender emailed me back several hours later.  "Sorry, but we can't do this deal."


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I then wrote back to him, "Because its an assisted living facility, right?"  I figured that since the SBA won't guaranty loans on apartment buildings, the SBA wouldn't finance assisted living facilities either.

I was wrong.  The SBA will, in fact, guaranty loans on assisted living facilities!!!  Huh, I learn something new every day.

"No, he replied.  "As an SBA lender, we CAN finance assisted living facilities.  The problem in this case was that the borrower wanted the loan proceeds to make some investments (speculations), and he also wanted a line of credit.  The SBA does not guaranty lines of credit or money to be used for investment; other than in the company.


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I often hear borrowers say, "I applied for an SBA loan, but I was turned down.   ABC Bank didn't like my property.  I guess I'll have to get a far-more-expensive conventional loan."

No, no, no.  SBA lenders have to retain a substantial portion of every SBA loan that they originate; and while one SBA lender might reject an otherwise qualified loan (still gotta be 51% owner-occupied, etc.), another SBA lender might happily jump on the deal.


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Franchise financing


Eeuuu.  That was random. has over 200 SBA lenders.  If you take four minutes to fill out our online application form, you can instantly submit the deal to all 200 of our SBA lenders, six at a time, until one of them says yes.

Listen to this:  I live in some rolling hills surrounding a beautiful lake.  Lots of houses on the hillsides can look down into the yards of their neighbors.  Sadly a hillside homeowner reported this week that a hawk swooped down and grabbed his neighbor's cute little Bichon puppy.  The hawk obviously killed and ate the puppy.  :-(


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This has been a bad month for animals around Geist Reservoir in Indianapolis.  A pack of coyotes killed two full-grown Golden Retrievers in another neighbor's backyard.  The dogs were barely alive when the owners returned, and they had been bitten so often that they died at the vet.  [Sob]  My son, Tom, has a beautiful, one-year-old Golden Retriever.  That dog is soooo sweet and loving.  I couldn't imagine if that had been his beloved Bernie.

Indiana teems with water, and therefore it teems with lush-green trees and wildlife.  A black mink (ferocious, 2.5 pound fighters) often runs through our yard.  There were three deer in my yard tonight.  Last year, across from Tom's house, my wife and I spotted a whole family of foxes.  They are pretty animals, but Tom has chickens.  Yikes.

Are you and your spouse on  I love that site.  Whole neighborhoods can share tips and juicy gossip.  Plus is 100% free.  Just like and Ajox.


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Topics: SBA loans

Every SBA Lender is Different

Posted by George Blackburne on Wed, Nov 8, 2017

Truck stop.jpg"I applied for an SBA loan but they turned me down."  Okaaaay, but what did the second SBA lender say?  How about the third?  Today's article is pretty long, so if you don't get to the end, please remember this important lesson:

Every SBA lender is different, and just because one SBA lender turns you down, this doesn't mean that another might not still approve your deal.  By using to  apply for your SBA loan (the orange button below), you can quickly shift your SBA loan application to six more of our 218 different SBA lenders. 

A lot of commercial mortgage borrowers think that the SBA is the lender, and therefore if the SBA turns them down that they are toast.  The SBA does not make commercial loans.  It only insures a part of the loan.  The actual lender is the bank making the loan.


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Bank of Wyoming makes a $900,000 new SBA loan to renovate a successful but aging truck stop on I-25.  Because the business was an existing one, rather than a start-up, the borrower was able to qualify for an SBA loan of 90% loan-to-value.  Had the business been a start-up, the maximum loan-to-value ratio would have been limited to just 70%.

Now the Small Business Administration is not going to guarantee the entire $900,000 loan.  The SBA wisely demands that the bank have some skin in the game.  The general rule is that the SBA will only guarantee between 50% and 85% of the loan made by Bank of Wyoming, depending on the SBA program (7a versus 504) used and other factors. 


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For the sake of this example, let's assume that the SBA agrees to guarantee 70% of the $900,000 truck stop loan made by Bank of Wyoming.  This means that Bank of Wyoming has 30% of $900,000 at risk in this loan or $270,000.  Requiring the bank to have some skin in the game helps to makes sure that banks don't make SBA loans willy-nilly.


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In real life, Bank of Wyoming has less than $270,000 at risk.  The bank can sell off the insured portion for a substantial premium.  The insured portion is 70% of $900,000 or $630,000.  Now a premium is the amount that a loan buyer or a bond buyer will pay in excess of the face value of the note.

In this case, lets suppose that Bank of Wyoming can sell off in the secondary market the insured portion of this truck stop loan at a premium of 10%.  Why would bond buyer pay a 10% premium?  An SBA loan yields 2.75% over Prime.  Since Prime is 4.25% today, that's a whopping government-guaranteed yield of 7%.  Thirty-year Treasuries today are only yielding about 2.8%.


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Now a 10% premium on $630,000 (the insured portion of our $900,000 loan) is a whopping $63,000!  Therefore Bank of Wyoming doesn't really have $270,000 at risk in the deal but it quickly sells off the insured portion for a $63,000 premium.  Now the bank has only $207,000 at risk in our $900,000 truck stop loan.

In doing my research for this article, I discovered that SBA lenders earn a handsome loan servicing fee of 1% per year.  Therefore the bond buyers are actually only netting 6% after loan servicing fees, but they are still quite happy to pay a 10% premium.  Heavens, I sure love-love-love loan servicing fees.  Every month my own hard money shop enjoys $90,000 in loan servicing fees, whether we close a new loan that month or not.


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Okay, we are closing in on the point of today's article.  It is quite possible that the Bank of Wyoming was the third Wyoming SBA lender to look at this deal.  The first two lenders might have turned down the deal because of the fuel tanks or because the deal depended on fuel sales increasing after the renoavtion.  The deal was too speculative in the eyes of the first two banks to look at the deal.

In stark contrast, the President of Bank of Wyoming loved the deal because his dad had owned a trucking company, and his dad had complained for years that this section of I-25 desperately needed a truck stop.  


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Remember, despite the large premium paid for SBA loans in the secondary market, Bank of Wyoming still had some serious skin in the game - $207,000.  Therefore the approval of any SBA loan is NOT guaranteed.  It depends on whether or not the bank reviewing the deal is willing to put a ton of their own dough at risk.

If you are trying to get your SBA loan approved, be sure to submit it through to our 218 SBA lenders.  If one our SBA lenders turns you down, you'll be invited to submit the same application to six more SBA lenders, with no additional paperwork on your part!  One, short SBA loan app works for all 218 of our SBA lenders.  Start by using the orange button below.


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Topics: SBA loans

SBA Loans Put on Hold By Government Shutdown

Posted by George Blackburne on Mon, Oct 7, 2013

Do you need an SBA loan to buy or refinance a commercial property?  If so, you may not be able to rely on your local SBA lender.  Perhaps an inexpensive bridge loan from Blackburne & Sons, one of the oldest private money commercial lenders in the country, would help.

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Our friends at ValuExpress recently explained the problem to us:

"It’s October 1 and through failure of Congress to enact a fiscal budget or a continuing resolution to authorize federal spending, all parts of the federal government not deemed “essential” halted operations effective midnight last night."  This includes SBA loans and the SBA!

"According to Bloomberg BusinessWeek’s account regarding the first federal government shutdown in 17 years, about 800,000 government workers are being furloughed. In addition, funding is suspended for a wide array of services, including contracts that government agencies award to small business owners."

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"This means that financing for small businesses will be significantly impaired. The Small Business Administration (SBA), which guarantees tens of billions in loans for tens of thousands of entrepreneurs annually, has furloughed about 62% of its 3,500 workers, according to its response to the threatened shutdown posted on the SBA website last week."

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"SBA lenders have been here before, but this situation is not nearly as disruptive as the annual 7(a) subsidy fights that Congress went through prior to 2004, which shut down the entire loan program three times in 1995 alone."

“The SBA shutdown is definitely a bummer for us as we have a $5-million SBA 7(a) loan closing in process with our affiliate, Country Bank and we are not sure if we can close the loan because we need the SBA to sign off on the Environmental Site Assessment (ESA) for the project,” commented Jim Brett, the ValueXpress underwriter on the project."

Our thanks for this heads-up go out to ValuExpress, one of the few commercial loan conduits to survive the Great Recession.  They're good folks.

Where does this leave you if you have an SBA loan in process?  If your seller has a competing offer circling your target property, or if you need a commercial loan right away to keep your company doors open, you should apply immediately to a private money commercial lender. At Blackburne & Sons, We make bridge loans, commercial loans, and permanent loans, up to $2.5 million, on commercial properties nationwide, owner-occupied or not.

A private money commerecial lender can typically approve your commercial loan within just 24 to 48 hours.  At Blackburne & Sons we can even give you a commercial bridge loan with no prepayment penalty, so the moment the SBA re-opens its doors and starts guaranteeing SBA loans again, you can immediately close your SBA loan and pay us off.

Private money commercial lenders, like us, will often allow junior financing.  What this means is that a private commercial lender - unlike most commercial banks - will allow the seller to carry-back a second mortgage behind their first mortgage.  In a rush situation, this extra flexibilty from your commercial lender could save your deal ... or even your company.

Remember, the SBA does not actually make commercial loans.  Instead, it merely guarantees a portion of them.  Your bank may still legally be able to make you a commercial loan today, but they will probably insist on a written commitment from the SBA to partially-guarantee your commercial loan first.  As long as the SBA is shut down, such loan guarantees will not be forthcoming.  

Consider a private money commercial loan instead. 

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If you need a commercial loan larger than $2.5 million, please apply by clicking the red button below:

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Topics: SBA loans