Borrower Guide

Borrower Guide

Step 1: Call Oregon Business Development

To discuss your commercial real estate purchase or new construction project.

Step 2: Contact Your Bank Lender

Your Oregon Business Development loan officer will make the process as easy as possible by working closely with your banker to pre-qualify your project, discuss eligibility, and determine a preliminary loan structure for your review. We’ll help you assemble application materials and a timeline will be established for funding your loan.

Step 3: Appraisal and Environmental Report

Your banker will order an appraisal and a Phase I Environmental Site Assessment (if required). This will save time, since loan approval can be contingent upon a satisfactory appraisal and Phase I.

Step 4: Approval Process and Commitment Letters

Your banker and Oregon Business Development will finish their approval process, issue commitment letters, and explain the terms of the loan commitments. If you agree with the terms, an estimated loan closing date will be set. In the meantime, the appraisal and Phase I will be completed (prior to loan closing).

Your bank will fund both the bank portion and the SBA 504 portion of your project. This represents both the first and second mortgages for your financing package. Later, Oregon Business Development will replace the temporary bank second mortgage with a permanent SBA 504 loan. Then you will have a permanent bank first mortgage and a permanent SBA 504 second mortgage.

Purchase of an existing building
We will start the closing process for the SBA 504 portion of your loan as soon as your bank has closed on the building purchase. You will be asked to sign loan documents and documents for funding a bond, which will become your SBA 504 second mortgage. Funding of the bond usually takes approximately 10 weeks from the time your bank closes on the building purchase. When the bond funds, your bank will be wired the money to replace the temporary second mortgage with your permanent SBA 504 loan.

Construction of a new building
Your bank will fund the purchase of the land and will manage construction disbursements. When your building is finished, the SBA 504 closing process will begin. You will be asked to sign loan documents and documents for funding a bond, which will become your SBA 504 second mortgage. Funding of the bond usually takes approximately 10 weeks from the time the construction lien period ends. When the bond funds, your bank will be wired the money to replace the temporary second mortgage with your permanent SBA 504 loan.

Step 5: Permanent Loan

Your bank first mortgage is now a permanent loan, as is your Oregon Business Development SBA 504 second mortgage. We’ll ask you for business tax returns each year and we will check with you two years after your loan has funded to verify the number of employees.