Joint Presentation On Hud & Sba 2011

Session # T17: Navigating the Credit Jungle – Opportunities in HUD and SBA Financing May 3, 2011 9:15 – 10:45am Mary Louisa L’Hommedieu, Partner, Dodd, L’Hommedieu & McGrievy Mark P. McGrievy, Partner, Dodd, L’Hommedieu & McGrievy Tim Dixon, Head of SBA Financing, Citizens Bank Susana Araoz, Chief Underwriter, Housing & Health Care Finance

CONTACT INFORMATION Mary Louisa L’Hommedieu Partner Dodd, L’Hommedieu & McGrievy, LLC 25 South Franklin Street Chagrin Falls, Ohio 44022 216-653-0002 Cell: 330-327-3853 [email_address]

CONTACT INFORMATION Mark P. McGrievy Partner Dodd, L’Hommedieu & McGrievy, LLC 25 South Franklin Street Chagrin Falls, Ohio 44022 216-653-0002 Cell: 216-952-0556 [email_address]

CONTACT INFORMATION Susana Araoz Senior Housing & Healthcare Specialist Housing & Healthcare Finance 5404 Wisconsin Ave. 2 nd Floor Chevy Chase, MD 20815 301-634-6829 [email_address]

CONTACT INFORMATION Timothy D. Dixon Chief, SBA Division Citizens Bank 4834 Richmond Rd. Cleveland, Ohio 44128 Phone: 216-514-5431 Fax: 216-514-7015 [email_address]

OBJECTIVES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

HUD Financing Susana Araoz, Housing & Healthcare Fianance

Opportunities in HUD financing Presented By: Susana Araoz

FHA (“HUD”) Insured Financing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Financing Purpose ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FHA Section 232/223(f) Lean Refinance and Acquisition ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FHA Section 232 Lean New Construction/Substantial Rehabilitation for Healthcare Facilities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FHA Section 223(a)7 Refinance of existing HUD debt ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FHA Program Requirements ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

HUD Timeline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CASE STUDY Texas Nursing Home ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],CASE STUDY TEXAS NURSING HOME

CASE STUDY Texas Nursing Home ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Recent Legal Changes in HUD LEAN ,[object Object],[object Object],[object Object],[object Object]

Pro’s & Con’s of FHA Financing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],PRO’S CON’S

SBA Financing Tim Dixon, Citizens Bank

NAVIGATING THE “CREDIT JUNGLE” OPPORTUNITES for SBA FINANCING OHCA/OCAL/OCDD 2011 Annual Convention May 2011 Timothy D. Dixon Head of Small Business Administration (W) 216-514-5431 [email_address]

Discussion Topics for Today… ,[object Object],[object Object],[object Object],[object Object],[object Object]

SBA Financing Can Be an Excellent Tool to Navigate Today’s “Credit Jungle” ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

SBA 7A Program ,[object Object],[object Object],[object Object]

Maximum Loan Size ,[object Object],[object Object]

Maximum Guarantees ,[object Object],[object Object],[object Object]

Loan Maturity/Amortization ,[object Object],[object Object],[object Object],[object Object]

[object Object],Maximum Interest Rates Allowed Loan Size Maturity < 7 years Maturity 7 years + $50,000 + 2.25 2.75 $25,000 - $50,000 3.25 3.75 Up to $25,000 4.25 4.75

SBA(One-Time)Guaranty Fee ,[object Object],[object Object],Loan Amount Fee on Guaranteed Portion < $150,000 2.00% $150,000-$700,000 3.00% > $700,000 3.50% > $1,000,000 (for the portion > $1,000,000 only) 3.75% Term 12 months or less 0.25%

Prepayment Penalties ,[object Object],[object Object]

Determining Eligibility – Do We Qualify? ,[object Object],[object Object],[object Object],[object Object],[object Object]

Ineligible Businesses Include… ,[object Object],[object Object],[object Object],[object Object]

Long Term Care Eligibility ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Eligible Passive Company ,[object Object],[object Object]

EPCs and OCs ,[object Object],[object Object],[object Object],[object Object],[object Object]

“ Small” Business Size Standard ,[object Object],[object Object],[object Object],[object Object],[object Object]

Credit Elsewhere Test ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Factors that Demonstrate “Need” ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Personal Eligibility ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Personal Resources Test ,[object Object],[object Object],[object Object],[object Object]

Personal Resources Exemption “ How much cash can I have before I have to chip in?”

Underwriting Considerations ,[object Object]

Credit Underwriting ,[object Object],[object Object],[object Object]

Equity Requirements ,[object Object],[object Object],[object Object],[object Object]

Collateral Requirements ,[object Object],[object Object],[object Object],[object Object]

Guarantees ,[object Object],[object Object],[object Object]

Collateral Supporting Personal Guarantee ,[object Object],[object Object],[object Object],[object Object]

Collateral Supporting Personal Guarantee ,[object Object],[object Object],[object Object]

Use of Proceeds ,[object Object],[object Object],[object Object],[object Object],[object Object]

Eligible Uses of Proceeds ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Ineligible Uses of Proceeds ,[object Object],[object Object]

Real Estate Occupancy Requirements ,[object Object],[object Object],[object Object],[object Object],[object Object]

Refinancing Existing Debt ,[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],Debt Considered Unreasonable

[object Object],[object Object],[object Object],[object Object],Provide a Substantial Benefit

Refinancing Same Lender Debt ,[object Object],[object Object],[object Object]

Refinancing Previous SBA Debt ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Change of Ownership ,[object Object],[object Object]

SBA Express Program ,[object Object],[object Object],[object Object],[object Object]

SBA 504 Program ,[object Object],[object Object],[object Object]

Purpose of 504 loan ,[object Object],[object Object]

Bank Benefits ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Borrower Benefits ,[object Object],[object Object],[object Object],[object Object],[object Object]

SBA 504 Loan limits ,[object Object],[object Object],[object Object],[object Object],[object Object]

504 Structure Overview Security Standard Financing New Business OR Both New AND Structure Limited/Special Limited/Special Purpose Property Purpose Property Bank 1st Mortgage 50% 50% 50% CDC/SBA 504 2nd Mortgage 40% 35% 30% Borrower 10% 15% 20%

Standard Financing Structure ,[object Object],[object Object],[object Object]

New Business or Special Purpose ,[object Object],[object Object],[object Object],[object Object],[object Object]

New Business and Special Purpose – cont’d ,[object Object],[object Object],[object Object]

The Bank Loan - Terms ,[object Object],[object Object],[object Object],[object Object],[object Object]

The SBA Debenture - Terms ,[object Object],[object Object],[object Object],[object Object]

Borrowers Equity Injection ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

SBA 504 Typical Loan Fees ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

SBA 504 Debenture Interest Rate ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Determining Eligibility ,[object Object]

Operating Business ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Size Eligibility ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Eligible Uses ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Economic Impact ,[object Object],[object Object],[object Object]

Ineligible Uses ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Ownership eligibility ,[object Object],[object Object],[object Object],[object Object],[object Object]

Occupancy Requirements ,[object Object],[object Object],[object Object],[object Object],[object Object]

Standard Debt Refinancing Provisions ,[object Object],[object Object],[object Object]

Standard Debt Refinancing Provisions ,[object Object],[object Object],[object Object],[object Object]

Special Debt Refinancing Program

Special Refinance Program ,[object Object],[object Object],[object Object]

Special Refinance Program ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Special Refinance Program Eligibility ,[object Object],[object Object],[object Object],[object Object]

Special Debt Refinance Program Eligibility-cont. ,[object Object],[object Object],[object Object],[object Object]

Special Debt Refinance Program Eligibility-cont. ,[object Object],[object Object],[object Object],[object Object],[object Object]

Special Debt Refinancing Program - Debt Structure and Lien Position ,[object Object],[object Object],[object Object],[object Object],[object Object]

Special Debt Refinancing Program - Restrictions ,[object Object],[object Object],[object Object],[object Object]

USDA Program Features ,[object Object],[object Object]

Eligibility ,[object Object],[object Object],[object Object]

ELIGIBLE BORROWERS ,[object Object],[object Object]

INELIGIBLE BORROWERS ,[object Object],[object Object]

ELIGIBLE LOAN PURPOSES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

INELIGIBLE LOAN PURPOSES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

RATES & TERMS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PERCENTAGE OF GUARANTEE & FEES ,[object Object],[object Object],[object Object],[object Object]

CREDIT REQUIREMENTS COLLATERAL ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CREDIT REQUIREMENTS - EQUITY ,[object Object],[object Object],[object Object],[object Object]

CREDIT REQUIREMENTS (OTHER) ,[object Object],[object Object],[object Object]

LOAN PROCESS ,[object Object],[object Object],[object Object],[object Object],[object Object]

APPLICATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Navigating The “Credit Jungle” Summary ,[object Object],[object Object],[object Object]

Housing & Healthcare Finance Senior Housing & Healthcare Specialist Housing & Healthcare Finance, LLC www.hhcfinance.com Susana Araoz Elan Magence 5404 Wisconsin Ave. 8320 Skokie Blvd 2 nd Floor Skokie, IL 60077 Chevy Chase, MD 20815 847-933-9464 301-634-6829 847-679-0088 (fax) 301-841-2304 (fax) [email_address] [email_address]

Joint Presentation On Hud & Sba 2011

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