As the borrower, you have an important role in the process.
Getting your Small Business Administration (SBA) loan approved is an important first step, but getting your money in hand requires a successful loan closing. The loan closing can take substantial time if you’re not prepared and able to provide what's needed to the lender's closing team in a timely manner.
To help you get ahead of the curve, we have prepared a closing checklist with the typical required information and documents. Gathering these items early can save days and sometimes even weeks in the closing process.
Closing Checklist
The specific list will vary depending on the loan program and specific concept, but the following items are often required:
7a Loan
- Fully executed Franchise Agreement and SBA Addendum to Franchise Agreement (if applicable)
- Organizational documents for operating entity (LLC, Corp)
- Fully executed lease agreement
- Fully executed Landlord Subordination Agreement (bank will provide template)
- Fixed price construction contract
- Equipment invoice
- Certificates of required business insurance
- Life insurance in the amount of the loan (if required)
- Proof of equity injection
- Any licenses/permits required by the State (if any)
Small Loan/Express
- Fully executed Franchise Agreement and SBA Addendum to Franchise Agreement (if applicable)
- Organizational documents for operating entity (LLC, Corp)
- Fully executed lease agreement
- Fully executed Landlord Subordination Agreement (bank will provide template)
- Certificates of required business insurance
- Proof of equity injection
- Any licenses/permits required by the State (if any)
- If buildout is involved, a Certificate of Occupancy (buildout must be complete and paid for prior to closing)
- Training certificate of completion
Loan Disbursement
How the bank disburses the funds will be dependent on the loan program and whether or not buildout or construction is involved:
7a Loan
- If buildout is involved, the lender must handle disbursements directly to your General Contractor. If you need other funds during buildout, you can provide an invoice for the bank to pay the vendor or a paid invoice for the bank to reimburse you - subject to a bank’s internal funding process. Once the buildout is complete, the remaining loan balance is typically wired to your business account to be used as operating working capital.
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If buildout is NOT involved, the lender typically requires invoices to directly pay vendors for any major costs (ex. equipment). Once those costs are paid, the remaining loan balance is typically wired to your business account to be used as operating working capital.
Small Loan/Express
- The loan is funded in one lump sum to your business bank account.
Important Notes
- Your timeline to close will greatly depend on your timeliness, as well as any third parties involved (ex. franchisor, landlord, contractor, insurance agent, State/County, etc.) in meeting the requests of the lender.
- If your total project cost includes funds for buildout of a new unit, your loan must close before construction begins.
- If your total project cost includes purchasing an existing/operating business, your loan must close before the purchase is made.
Whether it’s an SBA loan, a 401(k) rollover, or a combination, we’re here to help you determine the funding strategy that makes the most sense for you. Schedule a free consultation to review your available funding options.