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Closing Costs For Business Loans

Closing Costs can be included by lenders as a project cost and can be amortized over the life of the loan. Although many lenders will calculate their own closing costs and fees you can see definitions of items which may be included for your loan. Closing costs can be approximated at 1%-2% of the total loan requested, but may be adjusted by the lender as they underwrite the loan.

SBA Guarantee Fee

To offset the costs of its loan programs to the taxpayer, SBA charges lenders a guaranty fee and a servicing fee for each loan approved and disbursed. The amount of the fees is based on the guaranty portion of the loans. The lender may charge the upfront guaranty fee to the borrower after the lender has paid the fee to SBA and has made the first disbursement of the loan. The lender's annual service fee to SBA cannot be charged to the borrower. For more on how to calculate the SBA guarantee fee please visit the BoeFly intelligence center

Origination Fee

An up-front fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. Origination fees are quoted as a percentage of the total loan (ex. 1% of $200,000 = $2,000).

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Title Insurance

"Insurance policy that protects the holder of a property from loss sustained by defects in the title. Most title insurance is lender's title insurance, which is paid for by the borrower but protects only the lender.

Owner's title insurance is a separate policy in some areas it is paid for by the seller to protect the buyer's equity in the property. "

Loan Packaging Fee

Any fee changed to the applicant for packaging or assembly of their loan application and supporting documentation.

Commercial Real Estate Appraisal

A valuation of Commercial Real Estate by the estimate of an authorized person. In order to be a valid appraisal, the authorized person will have a designation from a regulatory body governing the jurisdiction the appraiser operates within.

Residential Appraisal

A valuation of Residential Real Estate by the estimate of an authorized person. In order to be a valid appraisal, the authorized person will have a designation from a regulatory body governing the jurisdiction the appraiser operates within.

Survey Charges

The process by which a parcel of land is measured and its area ascertained. The plan typically shows measurements, boundaries, area, and cotours.

Environmental Site Assessment

A study of land to determine any unique environmental attributes, considering everything from endangered species to existing hazardous waste to historical significance.

Tax Monitoring Fees

A closing cost used to ensure that mortgagors pay their property taxes. A tax service fee is typically paid by the buyer at the time the property is purchased, the lender then passes this sum on to a tax service agency. The role of a tax service agency is to look for delinquent property taxes and alert the mortgage company to prevent tax liens from existng against their mortgagors' property. Since tax liens have priority over lender liens, banks wants to ensure that they, not the state, become the owner of these properties.

Construction Loan Fees

A fee charged by the lender for the construction component of a loan. The fee is typically calculated as a percentage of the total construction costs.

Business/Practice Valuation

The process of determining the economic value of a business or company. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership and divorce proceedings. Often times, owners will turn to professional business valuators for an objective estimate of the business value.

Business Credit Report

A business credit report is a profile of your business that contains critical information that other businesses use when deciding whether to do business with you and banks and lenders use when deciding whether to issue credit to you and on what terms. The credit report may use a score to represent your businesses overall risk. These credit scores and reports give companies a fast, objective measurement of your credit risk.

Credit Reports

A report containing detailed informationon a person's credit history, including identifying information, credit accounts and loans, bankruptcies and late payments, and recent inquiries. It can be obtained by prospective lenders with the borrower's permission, to determine his or her creditworthiness.

4506 Tax Service Fee

The IRS 4506 tax form is used when individuals or businesses require a copy of their tax return. Form 4506 can also be used to designate a third party to receive the tax return. This might be required if an person or entity wants their tax return sent to their certified public accountant, probate executor, attorney or bank.

UCC Searches

"Uniform Commercial Code - code of laws governing various commercial transactions, that was designed to bring uniformity in these areas to the laws of the various states.To properly file a lien and take a security interest in property owned by the borrower, a lender must file the lien with the appropriate legal authority. Perfection of a lien on real estate is accomplished by recording the mortgage deed of trust in public land records of a municipality, such as a town clerk's office. "

Certificate of Good Standing

Certificate issued in the US by the designated authority in a state to verify that a corporation actually exists, has paid all its statutory dues, has met all filing requirements and, therefore, is authorized to transact business in that state. Also called certificate of authorization or certificate of existence.

Filing and Recording Fees

Charges associated with documents that are recorded in the couthouse in connection with a sale

Flood Certification

Identification of whether or not a property that is being acquired by loan applicants or used as collateral for a loan sits on government-designated flood plains.

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