Great Lakes Asset Corporation

SBA 504 Loan Process

Initiation

       At the onset of the application process, the borrower(s) will be asked to complete a "Project Description."  The information provided on this document will be utilized to determine what items will be required from the borrower(s) in order to prepare a complete application.  Upon receipt of the completed project description, GLAC will forward a package containing a list of the required items and any applicable forms (usually within 48 hours).  GLAC will expect a $2,000 deposit to be paid at this time.  The deposit will be held until the loan is funded.  After the funds are received by GLAC, the deposit will be returned less any direct costs to GLAC.  All cancelled loan applications will forfeit the deposit.

Compilation of Documentation

       When all required documents have been compiled and returned to GLAC, an initial application package will be assembled.  Administrative fees will be calculated on the net debenture. The final figure (gross debenture) including fees and a breakdown of the use of proceeds will be forwarded to the lender for confirmation.  When all final figures have been agreed upon, the information will be forwarded to the GLAC Loan Committee for review.

The GLAC Loan Committee

       The Committee, consisting of eight volunteers, meets monthly to discuss prospective projects and address any questions or concerns.  Often the Committee will raise questions that can be answered by the borrower(s) or lender.  A project must have the approval of the GLAC Loan Committee in order to proceed.

Finalization of the Application

       Following the approval of the GLAC Loan Committee, a final package will be prepared for submission to the SBA.  Any outstanding documentation must be provided prior to submission.  The borrower(s) may be called upon for signatures.

Submission to the SBA

       The completed application will be forwarded to the SBA Office in Sacramento, CA.  The SBA will examine the package for completion and assign it to a loan officer.  GLAC will receive a written notification form SBA confirming the receipt and assignment of the application.  Generally, GLAC will receive a verbal response from the SBA within 5 days from the date of assignment.  There have been instances where unforeseen circumstances such as government shutdowns have affected this timeline.

SBA Approval

       Should the SBA render an approval, a written Authorization and Debenture Guarantee will be issued to GLAC.  Both the borrower(s) and the lender will promptly receive a copy.  The Authorization should be thoroughly reviewed and any questions addressed.  A GLAC Loan Officer will meet with the borrower(s) to review the Authorization and answer any questions.

The Interim Lender

       The SBA will not disburse any funds until well after the project is complete.  Therefore, your bank will serve as the interim lender and the SBA will reimburse them at a later date.

Project Completion

       Both your lender and GLAC should be informed of your anticipated project completion.

Loan Closing Preparation

       Once we are made aware of your intention to close your loan, a GLAC Loan Closing Officer will contact you to begin the loan closing process.  You will be asked to compile documentation pertaining to your project and forward it to GLAC.  When all necessary items have been gathered, a closing date will be set.

Loan Closing

       A convenient time and location will be selected for your loan closing.  The actual process will be approximately one hour.  Any amount remaining from the initial deposits will be refunded to the borrower.  The final documents will be reviewed by the GLAC attorney and forwarded to the SBA Madison District Office.  The SBA will again review the documents and forward them on to Washington DC for funding.

Debenture Sale

       The debenture sale will generally take place two to three months after the loan closing.  The interest rate will be established at the time of sale.  The effective rate will include servicing fees as outlined in the GLAC monthly rate report.  The SBA funds will be electronically transferred to your bank in order to reimburse them for the interim financing they provided to you previously.  Final documentation such as a copy of the Note and an amortization schedule will be sent to you within two weeks of the debenture sale.  You will receive a residual check from Colson Services for an amount that will not exceed $1,000.  This check is a result of rounding numbers in the calculation of the gross debenture.

Payments

       Your payments will be withdrawn from your account on the first day of every month following the debenture sale.  The electronic debit will occur at midnight on the first of each month thereafter for the duration of your loan.  There are no exceptions made to this method of payment.

Loan Covenants

       The loan covenants are clearly outlined in the Authorization and Debenture Guarantee.  It will be the responsibility of the borrower(s) to adhere to the requirements.  One such requirement will be for the borrower(s) to supply quarterly and year-end financial statements to GLAC in a timely fashion.  Failure to comply with the loan covenants will result in the loss of servicing.  Servicing consists of release of collateral, requests for prepayment information, loan subordination, and the like.