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Member Business Loan FAQs
Please click on a question from the list below to view the corresponding answer.
Q: How do I apply for a business loan?
- A completed business loan application must be submitted with the appropriate support documentation to begin the loan request process. These would include but not limited to a Personal Financial Statement, Personal and Business Tax Returns for three years, Business Financial Statements for any interim period, an Authorization to Release Information, and a brief loan request summary.
Q: What Member Business Loan (MBL) products are available?
- The following loan products are currently offered:
- 1. Conventional Real Estate Loans
2. Conventional Small Business Loans
3. Small Business Administration (SBA) Loans
Q: For what purposes can MBL proceeds be used?
- MBL proceeds can be utilized for legal and allowable business purposes, to include but not limited to the purchase of commercial real estate, business acquisitions, equipment purchases, working capital, and refinances.
Q: Are MBL rates fixed or variable?
- The Use of Proceeds and loan type determine which type of rate is offered.
Q: What term options are available?
- The following types of loan programs are currently available:
- 1. Conventional real estate loans are offered as either of two scenarios
- a. Fixed rate for a 5-year term with a 20 or 25-year amortization
b. Adjustable rate for a 10-year term with a 20 or 25-year amortization. The initial rate would be set for a 5-year period. The rate would then be adjusted and set for the final 5-year period.
3. SBA loans are offered with adjustable rates with for a term comparable to the Use of Proceeds involved in the transaction up to the maximum maturity allowed by the SBA. These terms are typically 10 to 25-years and are fully amortizing loans, whereas there are no balloon payments.
Q: What are the MBL loan rates?
- MBL loan rates are competitive and market driven. The rate is set at the time of application.
Q: Are business Lines-of-Credit available?
- Business Lines-of-Credit up to $50,000 are offered through the business credit card program. Lines-of-Credit over $50,000 are not offered at this time.
Q: What is the minimum loan amount?
- The minimum loan amount for all MBL products offered is $150,000.
Q: What is the maximum loan amount?
- The maximum loan amount ranges up to $5,000,000 to $10,000,000 based upon the loan product being utilized.
Q: Are there any fees associated with the application process?
- The application fees are determined by the Credit Union involved in the transaction. Applicable SBA packaging fees are due at the time of submission to the SBA.
Q: Does the loan have to be secured by collateral?
- Most loans require the assets being financed secure the loan. Based on the loan product utilized additional collateral may be required.
Q: What type of financial data is required with the application?
- The following list is customary on nearly all MBL’s
- 1. Personal Financial Statement, completed within 60 days of application
2. Personal Tax Returns for three years, inclusive of all schedules
3. Business Financial Statement, completed within 60 days of application
4. Business Tax Returns for three years, inclusive of all schedules
5. All Affiliate Financial Statements, completed within 60 days of application
6. All Affiliate Tax Returns for three years, inclusive of all schedules
Q: Is there a max number of properties a broker or realtor may own?
- The maximum is dependent upon total loan balances outstanding to any one creditor and not necessarily related to the number of properties.
Q: How long does the approval process take?
- A typical MBL application package has a decision within 10 business days.
Q: How are loan proceeds disbursed?
- Loan proceeds are sent to settlement via wire transfer or direct deposit. The proceeds are disbursed accordingly based on the loan approval and commitment letter. Proceeds to the Borrower in the form of working capital are typically received via wire transfer or direct deposit into the business banking account at the Credit Union.
Q: How are loan payments calculated?
- Monthly loan payments are calculated using a simple “Principal AND Interest” calculation utilizing the approved rate and amortization of the loan.
Q: Does the monthly loan payment stay the same over the life of the loan?
- Loans with fixed interest rates
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1. Loans with fixed interest rates for the entire amortization period will experience fixed monthly payments.
2. Loans with fixed interest rates that adjust for the second 5-year term will experience a change in the monthly payment only if the interest rate index changes during the first 5-year period.
Loans with variable interest rates
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1. Loans with variable interest rates will experience the same monthly payments as long as interest rate index remains constant. These variable interest rate loans will experience a change in the monthly payment if the interest rate index fluctuates. The typical adjustment period for variable rate loans in calendar quarterly.
Q: How will I receive monthly loan statements?
- Loan statements are sent via First Class mail with the United Stated Postal Service.
Q: When should I expect to receive monthly loan statements?
- Loan statements are sent by the 20th of each month.
Q: How do I make a loan payment?
- All loan payments are set up to be auto-drafted via an ACH from the operating account held with the Credit Union.
Q: Are there any penalties for early payoffs?
- There are no prepayment penalties for conventional real estate and conventional business loans.
There may be brief prepayment penalties for some SBA products with maturities over 15-years. For these loans, if more than 25% of the outstanding principal is pre-paid in any of the first three years of the 15-year loan, a declining prepayment penalty is assessed (5%-first year, 3%-second year; 1%-third year).
Q: How far in advance can I pay future loan payments?
- Conventional real estate and business loans treat any payment in excess of the monthly payment amount as a reduction in principal.
For advance payments on SBA loans, the excess is categorized as a “Paid in advance” status.
Q: What is the grace period for late loan payment?
- The typical grace period for MBL’s is 10 days beyond the first of the month; however, this is determined directly by each Credit Union.
Q: What is the fee for late loan payments?
- The typical late charge will be equal to 5% of the overdue payment. Additionally, usually a charge of $50 will be assessed for any check tendered by the Borrower that is not honored when presented for payment.
Q: Where do I call with questions regarding my business loan?
- All calls are accepted at Mid-Atlantic Financial Partners at (240) 454-8280. Please listen to all the options available before choosing your destination.
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