Eliminate collateral gaps, reduce interest rates, close more loans
Rapid and lender-friendly loan participations that improve loan to value and reduces interest rates.
The BFA’s loan participations are subordinated to the bank, immediately improving your security position. Zero interest is charged in the first year, and reduced interest for the second year. Flexible collateral requirements and a rapid turnaround time.
- The business must have annual revenues of less than $5 million
- Participation amount $100,000 to $5,000,000
- Maximum loan size $20,000,000
- Loan must be for business purposes
- Commercial real estate, equipment, and working capital are all eligible
- Passive real estate, business acquisitions, and owner cash-outs prohibited
- No fixed collateral requirements
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What is the approval process for Loan Participations?
After receiving all pertinent information for the lender and confirming eligibility, BFA staff will review the materials and make the approval decision within 24 to 48 hours. Documents will be provided either electronically or via hard copy to complete at closing.
What are the fees?
The BFA charges a one-time 1% fee at closing, based on the BFA’s participation amount. For example – If the BFA was a 25% participant in a transaction, the one-time fee would 0.25% of the total loan amount.
Is refinancing permitted?
Generally no. However the loan participation program can be used to refinance debt under a very narrow set of specific circumstances, per federal regulations. The new loan must be 50% greater than the refinanced amount, and the interest rate on the new loan must be at least 30% less than the refinanced loan.
Is the loan participation permanent?
No. The lender can cancel the participation at any point with no fees or penalties.
What happens if the loan defaults?
Liquidation proceeds are first applied to the bank portion of the transaction. Then they are applied to the BFA’s portion of the transaction.
What are the collateral requirements for a BFA loan participation?
There are no collateral requirements. However the overall credit profile of the borrower must be acceptable to the lender and the BFA.
Is residential real estate eligible for a BFA loan guarantee?
Are there any application fees?
No, the BFA does not charge application fees.
Are start-ups eligible?
Yes, but must pass commercially reasonable underwriting standards
Are non-profits eligible?
Yes, non-profits are eligible assuming the meet all other criteria
Are there any minimum job creation requirements for the loan participation program?
No specific requirements. However the BFA’s mission is to create NH jobs and may decline a transaction if there is no NH benefit.
Is passive or investment real estate eligible?
No, real estate must be mostly owner occupied to be eligible. However, if the business occupies only part of the real estate and rents the remainder, it may be eligible. Call the BFA for further discussion in these circumstances.