There is an important change to 504 loan closings during the COVID-19 crisis.  The RDC is required to complete a “No Adverse Change Determination” for every 504 loan funded.  This analyzes the borrower’s financials and attests that there has been no unremedied adverse change since the time of loan approval.  Clearly, during the COVID-19 crisis, nearly every business in the country has experienced an adverse financial change.  These changes include lost revenue, increased expenses and lower net profit.  The changes to the closing process for 504 loans will allow the RDC to continue closing and funding 504 loans during the pandemic.  This form is REQUIRED for loan closings and the borrower and bank CANNOT opt out of signing unless it can be proven with the company’s most recent financial statements that the borrower has not experienced ANY adverse change to it’s financial condition due to COVID-19.

 

This closing process change includes the third party lender (bank), borrower and the RDC signing a new COVID-19 Agreement Form.  This form requires the RDC and the third party lender to defer payments on the associated loans for a minimum of 90 days after the SBA debenture funds.  It also requires all parties to attest to additional items.  The complete form can be found below.

 

COVID-19 Agreement Form

 

To learn more about the new closing procedures, please watch the pre-recorded webinar below:

RDC webinar – 504 Loans during the COVID-19 crisis

Play recording (35 mins)