Servicing FAQ
Servicing Frequently Asked Questions
- How do I find my loan balance?
- How do I find out the amount of interest paid on my loan?
- What is my Note Rate?
- What are the SBA, CSA and CDC fees shown on the amortization schedule?
- Who is Colson Services?
- Am I eligible for additional SBA loans?
- What are the annual reporting requirements for my SBA 504 loan?
- When is my payment due?
- How do I change my automatic payment to a new account?
- How do I change my address or other information?
- What are Servicing Actions?
- Can I prepay my SBA 504 loan?
- Is my SBA 504 loan assumable?
How do I find my loan balance?
- The amortization schedule, included in your package provided after funding, indicates application of each payment to principal, interest, and fees. If your loan is current, this schedule will reflect the exact balance at all times. Please note that the loan balance is not the same as the loan payoff amount. Alacom can also provide a Loan Detail which indicates application of payments and principal balances. Contact us to receive a Loan Detail.
Back to Top
How do I find out the amount of interest paid on my loan?
- Annually, a Form 1098 is provided to the borrowing entity stating the interest paid for the most recent calendar year. Colson Services mails 1098 forms directly to non-exempt borrowers no later then January 31 for the prior calendar year. Year-end statements, for exempt borrowers, are sent to Alacom. We in turn mail a copy to the borrower. The forms now include the total CSA, CDC and the ongoing SBA Guarantee fees as well as the note balance on December 31 of the prior year. Alacom can also provide a Loan Detail which indicates application of payments and principal balances. Contact us to receive a Loan Detail.
Back to Top
What is my Note Rate?
- The Interest Rate is shown on the note and amortization schedule included in your package provided after funding. The interest rate stated on the note does not include the SBA, CSA and CDC servicing fees. Although the interest rate on the note is fixed, payments are lowered every 5 years as the fees are adjusted.
Back to Top
What are the SBA, CSA and CDC fees shown on the amortization schedule?
-
SBA (Small Business Administration). The fee paid to SBA represents a guarantee fee required under the Code of Federal Regulations (CFR) to cover a loss reserve for the program.
- CSA (Central Servicing Agent). The CSA is also known as Colson Services Corporation. The CSA fee covers charges by Colson Services Corporation to handle payment processing and loan accounting. Colson Services Corporation is appointed by the SBA to accept monthly payments, hold the monthly payments until the semi-annual debenture payment is due, pay the semi-annual debenture payments, and calculate and accept full payments on the SBA 504 Loan.
- CDC (Certified Development Company) and for purposes of this website also known as Alacom Finance. The CDC is required to service the loan on behalf of the SBA by enforcing the terms of the loan documents. The CDC fee is set forth in the Code of Federal Regulations to pay for the servicing of SBA 504 Loans and cannot be waived.
Back to Top
Who is Colson Services?
-
Colson Services Corporation is our Central Servicing Agent (CSA). They handle payment processing and loan accounting for all SBA 504 Loans. You will notice a notation on your bank statements referencing Colson Services followed by your loan number.
If you have any questions or problems about payments, please contact Alacom Finance. Colson Services Corporation does not handle any client phone calls. Any correspondence regarding your loan payments should be directed through Alacom Finance.
Back to Top
Am I eligible for additional SBA loans?
- To find out if you are eligible for more financing through the SBA 504 or other programs, contact our servicing department. We will talk about your current loan balance and new project idea and advise how you can access more financing.
- The amount of additional SBA financing you can obtain depends on the details of your new project and remaining SBA loan eligibility. Every small business owner meeting SBA eligibility guidelines can qualify for an aggregate SBA indebtedness up to $1.5 million for general small businesses, $2.0 million for small businesses meeting SBA Public Policy Goals and $4.0 million for small businesses which are manufacturers.
Back to Top
What are the annual reporting requirements for my SBA 504 loan?
-
Insurance
Provide evidence of hazard, liability, personal property and workers compensation insurance on the project property securing the 504 loan, at the full insurance value or at replacement cost basis, with a Mortgagee/Loss Payee Clause (or substantial equivalent) in favor of:
U.S. Small Business Administration and Alabama Community Development Corporation and its successors and or assigns as their interest may appear
117 Southcrest Drive Suite 100
Birmingham, AL 35209
Your agent should provide us with a new certificate annually.
If you change insurers please provide information about your new agent. Helpful information includes your agent's name, address, phone number, fax number and your policy number. -
Real estate taxes
Please check with your local taxing authority to determine when your real property taxes are due. Escrow for taxes has not been included with your loan and you are responsible for paying the taxes. A copy of your receipt from the local taxing authority is required each year. -
Financial statements
Provide Period Ending financial statements to include:
Business Federal Tax Return, with all schedules
Income Statement (Profit & Loss)
Balance Sheet (Assets, Liabilities & Owners’ Equity).
The above information should be furnished each year within 120 days of your company’s fiscal year end. Please contact us if you have filed an extension. -
Job reporting
A requirement of the SBA 504 Loan was to create and/or retain a certain number of jobs. Alacom Finance is required by the US Small Business Administration to obtain this information at the two year anniversary of the loan funding date. We also report annually to SBA and ask that you provide the current number of employees each year.
Back to Top
When is my payment due?
- Payments are due on the first business day of each month, and are made by automatic debit. Late fees are due if the payment is received after the 15th of the month. Please contact us immediately if you have a question or a problem.
Back to Top
How do I change my automatic payment to a new account?
-
Monthly payments are withdrawn automatically from a designated account, through the ACH system. This is set-up at the original loan closing. To change accounts, the borrower must submit a new ACH Agreement and a blank VOID check from the new account.
Please contact us to receive the ACH Form. You may Fax or e-mail the form and check and follow with the originals in the mail.
Please note that changes must be received in our office by the 10th of the month in order to become effective for the following month's payment.
Back to Top
How do I change my address or other information?
- Please contact us by by mail, e-mail or FAX to provide the updated information.
Back to Top
What are Servicing Actions?
- A Servicing Action is a request for change.
Alacom Finance reviews all servicing requests for eligibility and
reasonableness and submits the request to the SBA servicing center in
Little Rock, Arkansas. Please contact us for a guideline for your
specific request. To help expedite servicing requests, Alacom Finance
requires that all reporting requirements have been met. This includes
providing the following:
- Annual Financial Statement
- Current Interim Financial Statement
- Copy of the paid property tax receipt
- Proof that the hazard insurance is up-to-date
- Other reporting requirements as specified in the SBA Authorization for Debenture Guaranty
- Alacom Finance will undertake certain actions with SBA approval which include: Approve up to 6 months cumulative payment deferment (or 20% of the original amount of the loan, whichever is less) if the borrower can reasonably project that it will bring the loan current within five years
- Release collateral up to the cumulative value of
20% of the original loan amount, if:
- Proceeds from the release are for business purposes
- The remaining collateral is reasonable in relation to the loan balance
- The release will not decrease the value of other collateral
- The action is necessary for the survival of the business and future repayment from profits is anticipated
-
Substitute equal or greater equity in like kinds of collateral
Subordinate to new third party financing, if the terms are more favorable, the borrower receives no funds, and the term equals or exceed the term of the original loan
Make changes to life insurance or hazard insurance requirements, release insurance proceeds for the repair or replacement of damaged collateral, and release the cash surrender value of life insurance
Approve changes in form of business structure i.e. LLC, LLP, Sub-S Corp etc.
Release or substitution of Guarantors resulting from retirement, sale of business or assumption
Back to Top
Can I prepay my SBA 504 loan?
- Yes, loans are funded via the sale of bonds which requires a slightly different payoff process than a typical bank loan. Partial prepayments are not accepted. A possible alternative to loan payoff may be loan assumption. Please contact us right away if you are considering loan payoff or loan assumption.
-
Prepayment of an SBA 504 Loan:
Nine (9) days written notice is required to schedule a prepayment. The last day to prepay an SBA 504 Loan is the 3rd Thursday of each month.
All payoffs must be made by wire transfer.
Prepayment is calculated through the next semi-annual date of the loan.
Prepayment premiums may apply. Prepayment premium levels decline at six (6) month intervals based upon the loan funding month; and are eliminated once half of the term has passed (i.e., after 10 years, there is no prepayment premium for a 20 year loan. After 5 years, there is no prepayment premium for a 10 year loan).
Back to Top
Is my SBA 504 loan assumable?
- If the business is sold, qualified buyers can assume the loan, often with full release of original borrowers and guarantors. A request to assume an existing SBA 504 loan will be reviewed for eligibility and credit worthiness. There is a required 1% assumption fee plus reimbursement for legal fees and other out-of-pocket fees. Please contact us and we will be happy to discuss specific eligibility and requirements.
Back to Top
