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Picking back up on the timeline.  There was about a 6 month process of going back and forth needing more paper work, more signatures, more explanations.  It was, in my humble opinion, extremely bureaucratic, arduous, and overly complicated.  If it wasn’t for sheer determination on our parts, this project would never have finished.  Here’s the kicker.  Once the initial application package was assembled, stamped, and initially approved, we were sent to the underwriter and had to start the whole process over again.  I’m not exaggerating when I say in my first phone call with the underwriter – 6 months after dealing with loan manager – they had no clue who we were as a business.  Asking simplistic questions about what type of business we were involved in and who we were.  It was beyond frustrating.  Having only done this once, I don’t know if this is commentary on Wells Fargo or the entire industry in general.

By this point, we ran up against the December 31st.  This turned out to be a big deal because once we hit the new year, everything needed to be redone.  2012 taxes needed to be included in the application, updated projections, and updated financials all because the process was taking so long.

Luckily, we had an understanding seller.  By this time we had a signed purchase agreement in place – a requirement for the loan application.  This is relevant because in the purchase agreement there were escrow date requirements, due diligence periods outlined, and a closing date specified.  The loan application process was taking so long that we had to continually push these dates back.  It felt unprofessional and was slightly embarrassing to have to go back to the seller and ask for more time over and over again.  The seller stuck by us, can’t say I blame him.  He was getting more than the appraisal during one of the worst real estate collapses in US history.

The back drop to this process was Wells pushing the 7a loan on us, trying to work the system into qualifying us for the 7a loan.  In the end, almost 9 months into the process they finally approved us for the 7a loan with the  unexpected requirement to put an extra 10% down! An extra 10% on 1.5 million dollars is a lot of money.  For Wells Fargo to spring this drastic change on us after 9 months of false promises and expectations was absolutely demoralizing.  Enter the CDC Small Business Finance.

The CDC is the distributors for the SBA 504 loans.  In the 504 loan, the loan is made up of three parties: the CDC, our down payment, and a 3rd party bank.  Normally, it takes work to find that 3rd party bank.  We had one already in Wells Fargo.

Of course, this meant filling out the CDC’s loan application – you know that package that took us 6 months to prepare for Wells Fargo.  With the CDC it was done within a week and an approval made within 3 weeks after that.  This is not to say that there weren’t hiccups along the way with them.  My brother and I both had an extra form and written requirement to explain our past criminal record.  I don’t feel the need to go into details other than to say they were misdemeanors and – more importantly – we learned that 25% of loans the CDC gives out (which remember are direct SBA loans) are given to people with a past record. An extremely interesting fact.

With our approval in with no additional financial requirements  after a 14 month process, we signed, we celebrated.  We are officially property owners.