Wednesday, October 27, 2004

SBA Loans

Has anyone here applied for an SBA loan? We received proposed loan papers today in the mail, and found in reading them that the paperwork required throughout the rebuilding process is so onerous, and there is so much old fashioned bureaucratic B.S. involved at so many levels of the transaction, that we are refusing the loan forthwith. Actually, what we are having to do is cancel the loan in writing, even though all we thought we'd done was make an application, and definitely haven't signed anything else since then. Apparently the SBA considers the application a commitment to accept the loan unless cancelled within three bsuiness days of receiving the papers. If the application stated that, we sure didn't see it anywhere, and would have been extremely wary had we known.

From what we're reading in the fine pring, the SBA may have already placed a lien on our property and/or notified our insurers, even though we haven't signed all the loan documents. Can you believe this?? All I can say is, if this slows down our insurance settlement checks or the clearing of same with our mortgage bank, we will be a couple of very unhappy puppies.

Besides overnighting the cancellation tomorrow, we will be phoning the SBA first thing in the a.m. This whole thing was very shocking to us, the SBA tactics and terms very heavy handed (sorry I don't have time to offer examples here), and we'll never, ever try it again.

Also won't have a chance to check this, so please forgive typos.


Beach Blogger said...

Is it possible you have misread the SBA notice? It is common, even prudent, for all financial institutions who are contemplating making a loan to file a public notice that looks like a lien but doesn't "attach" until and unless money changes hands. This is intended to put all other potential creditors on notice that there may be an outstanding loan claiming the described collateral. It doesn't mean there is such.

By this means, all other potential lenders, creditors, and the world at large are simply put on notice that if they want more information they should contact the filing party, or "creditor," to determine if it is claiming priority over the described collateral. Thus, for example, a lending institution after contacting SBA today would learn that while the SBA filed a notice, it has not yet lent money. Therefore, the 'lien' hasn't attached. The new institution then could have confidence that if it actually made a loan to you today and if it also filed a mortgage/lien today (or within a statutory number of days later), it would have priority over any later SBA lien which "attaches" when the SBA makes a later loan to you.

I think all of this is S.O.P. You may want to re-think your overnight.

Linda L. said...

Already spoke with John B. about this, but just briefly for the benefit of others: There was no lien and no intent notice sent; I spoke with the SBA attorney in Atlanta and was assured that the 3-day cancellation wording was confusing everyone and that I should "not worry about it," that it was meant to be a consumer protection but was causing more trouble than it was worth in its implication that the loan was already in process before we even signed anything. So we still sent the cancellation, but not by overnight mail. As previously indicated, the main reason we didn't want the loan in the first place was the huge burden of paperwork required to obtain releases of funds as work progresses. Also, the SBA would require that we expend the funds in the exact proportion they doled them out insofar as the ratio of rebuilding funds vs. personal property loss funds; if, for instance, I'd rather put more money in repair and less money in replacement clothing or furniture, I'd have to apply for a re-distribution of funds. What a bunch of hooey. Count me out.

P.S. to Barrett: I've sent you several emails over the past week or so, nothing earthshaking, but, since you're not currently on Mediacom, how can I get them to you?