SBA 504 Loan Interest Rates
Official monthly SBA 504 effective interest rate tables can be found at Eagle Compliance LLC. 25- and 20-year term loans fund every month; 10-year term loans fund every other month. Effective interest rates are inclusive of servicing fees, which are subject to credit risk of the applicant.
Q: Can a Small Business Administration (SBA) 504 loan be closed if the Internal Revenue Service (IRS) tax transcripts have not been received and verified?
A: For all 504 loan transactions, the Certified Development Company (CDC) must submit a signed IRS Form 4506-T (with SBA logo) to the IRS to obtain a federal income tax transcript information on the borrower, or the operating company, if the borrower is an eligible passive company, for the last two years.
The purpose of the SBA's tax verification process is to determine if:
1) The small business applicant filed tax returns; and
2) The small business applicant's financial statements as part of the application agree with the business tax returns submitted to the IRS.
Prior to the first disbursement of loan proceeds, the CDC must obtain the verification of the borrower financial information, using the guidelines as outlined in SOP 50 10 5(I). Specifically, within 10 days of receipt of the loan authorization, the CDC must submit IRS Form 4506-T (with SBA logo) to the IRS to obtain federal income tax information on the borrower, or the operating company, if the borrower is an eligible passive company, for the last two years. Furthermore, the following must be taken into consideration:
a) If the borrower has been in operation between zero and two years, transcripts must be obtained for all years the business has been operating;
b) This requirement does not include tax information for the most recent fiscal year if the fiscal year-end is within six months of the date the SBA received the application. If the applicant has filed an extension for the most recent fiscal year, the CDC must obtain a copy of the extension along with evidence of payment of estimated taxes; and
c) For a change of ownership, the CDC must verify financial information provided by the seller of the business in the same manner as above.
Specifically, if the CDC does not receive a response from the IRS or a copy of the tax transcript within 10 business days of submitting the 4506-T, the CDC:
1) May proceed to close and disburse the loan;
2) Must follow-up with the IRS to obtain and verify the tax data by resubmitting a copy of the 4506-T to IRS marked “second request”;
3) Must document its file with a copy of the second request; and
4) Must perform the verification and resolve any significant difference discovered.
In the event a discrepancy is discovered by the CDC, the borrower must resolve any significant differences to the satisfaction of the CDC. Failure to resolve differences may result in cancellation of the loan.
If you have a question you'd like our SBA 504 loan experts to answer, email us atinfo@ffcfc.comor call850.681.3601 or toll-free at 888.320.5504.
