EDF Newsletter - May 2018 - Interest Rates, Debt Refinance Updates, 25 Year Debenture, Lender Leader Board and Other News!

May 2018

Interest Rates

5.22%

20 Year Standard Rate

5.26%

20 Year Refinance Rate

5.28%

10 Year Standard Rate

5.33%

10 Year Refinance Rate

SBA Makes Positive Changes

to Debt Refinance Program

The SBA announced major changes expanding the ability for businesses to refinance using the SBA 504 Loan Program effective on all applications starting June 4, 2018. The changes are intended to allow more businesses who are facing balloons or rate adjustments to take advantage of the SBA 504's current low fixed rates. Perhaps the best change is that SBA relaxed the rule on eligible debt that can be refinanced to now allow notes that are less than two years old if they were simply a renewal of a previously ballooned note.

A summary of the rule changes to SBA 504 debt refinance are as follows:

Ballooned note less than 2 years old can now be refinanced. SBA is revising the criterion to allow certain loans refinanced within the two years prior to the date of application to be eligible as the same "indebtedness" if the effect of the refinancing was to extend the maturity date without advancing any additional proceeds. Previously the note had to be two years old.

The maximum LTV on a 504 debt refinance project remains 90%. When the project involves a limited or single purpose building or structure, the maximum loan to value will be 85%. If the borrower is using the loan to get cash out to pay eligible business expenses, that cash out is limited to 20% and an 85% LTV.

SBA expanded the use of what cash out can be used for to include minor building improvement expenses as well as credit card debt if it was incurred for business purposes.

When the project has significant equity of greater than 20% the SBA will now allow the project debt to be split equally between the participating lender and the SBA allowing the borrower to maximize the amount of debt they can refinance with a fixed rate.

SBA revised the period which a 504 debt refinance loan must be disbursed from 6 months to 9 months to give the bank and borrower more flexibility.

The borrowers will have the choice of a 10, 20, or 25 year fixed rate on the 504 second mortgage on 504 debt refinance projects. The bank term must be at least 10 years.

To learn more about the 25 year debenture, please contact one of our Loan Officers, Gary Witkowski or Bradd Pierce or by calling our office at (616) 459-4825.

25 Year Debenture

Now Available!

Effective immediately, the U.S. Small Business Administration is permanently offering a 25 year debenture with a 25 year maturity! This new product is in addition to the 10 and 20 year debenture that are currently available. Furthermore, the fees associated with this debenture are expected to be the same as the 20 year note. The Third Party Lender Loan accompanying the 25 year 504 loan is required to have at least a 10 year term.

One benefit of the 25 year loan is that it will decrease the monthly payment for the small business borrower and will provide flexibility to better manage critical operating capital, which becomes more important when cash flow is increasingly challenged by rising operating expenses and interest rates.

EDF has started to accept applications. To learn more about the 25 year debenture, please contact one of our Loan Officers, Gary Witkowski or Bradd Pierce or by calling our office at (616) 459-4825.

Lender Leader Board

EDF would like to thank all of the lenders that have had loans authorized with us so far this fiscal year. At the end of our current fiscal year (9/30/18), the lending institution with the most loan approvals will receive our Lender of the Year Award.

Independent Bank

12 Loans

Huntington Bank

4 Loans

Honor Bank

3 Loans

Consumers Credit Union

2 Loans

Chase Bank

1 Loan

Choice One Bank

1 Loan

Comerica Bank

1 Loan

Community Choice Credit Union

1 Loan

Grand River Bank

1 Loan

Horizon Bank

1 Loan

Macatawa Bank

1 Loan

Mercantile Bank

1 Loan

The Bancorp

1 Loan

Union Bank

1 Loan

West Michigan Community Bank

1 Loan

West Shore Bank

1 Loan

FY 2018 Total

Totals as of 04/30/2018

33 Loans

The Lenders Cup

All of the lenders listed above, along with any other bank or credit union that has a project authorized by EDF prior to September 1, 2018, will be eligible to compete in The Lenders Cup Golf Tournament! Last year was our inaugural event and the traveling trophy went home with Traverse City State Bank, which is now Independent Bank as of April 2, 2018 ! This year's event will take place on September 13, 2018 at Thornapple Pointe Golf Course . Each lending institution will have the opportunity to submit a foursome to compete.

Featured 504 Funding

C2 Machining, LLC

The owners of C2 Machining, LLC recently used the SBA 504 loan program to purchase new equipment for their expanding machine shop located in Kentwood, Michigan. Both pieces of equipment were large capacity machines making C2 Machining very competitive and giving them a unique advantages in the local West Michigan Tool and Die Manufacturing sector. Additionally, some of the business that they oursourced will now be completed in house at a cost savings. The advantage of long term fixed rate financing provided by the program gave the owners a lower payment than conventional financing with a fixed interest rate for the life of the loan.

C2 Machining, LLC was purchased in 2012 by the current owners out of a distressed situation. Over the last 5 years Management has grown and diversified the revenue stream and structured the company for long term success.

Thank you Old National Bank and Mike Van Wyk for partnering with Bradd Pierce, EDF's S enior Loan Officer, and accessing the 504 Loan Program for this equipment purchase!

To learn more about the benefits of the SBA 504 Loan Program, or how EDF can assist you, please visit our website at www.growmichigan.com, or contact one of our Loan Officers, Gary Witkowski or Bradd Pierce.

Call EDF for your 7(a) Packaging Needs

EDF can assist your bank or credit union with 7(a) Loan eligibility and questions. We can also prepare loan applications and submit them directly to the SBA for approval. If you do not have an in-house SBA specialist, please consider using EDF for your packaging needs. For more information, please call Amy Dubridge at (616) 323-1279 or you may send an email to Amy@growmichigan.com .

Schedule a Lunch and Learn

EDF would love the opportunity to bring lunch to your organization, get to know your entire team, and do a brief presentation on the benefits of the 504 Loan Program. We are currently scheduling into March and April. If you would like to set up a time, please call Kyle Wilson at (616) 323-1272 or you may send an email to Kyle@growmichigan.com .