But first, let me address a few common concerns with SBA financing. The SBA has a bad reputation with many, as being overly cumbersome. And granted, if you work with the wrong bank, you will likely double the processing time to get the loan done. Many banks that are not fully focused on SBA loans, will have to have their loans underwritten twice, once by the bank, than by the SBA If you go with the right source, your loan will only have to be underwritten once.

The other common concern is that people have a misperception that if one bank declines the file that the loan request must not fit the SBA guidelines and is not eligible.?? People need to keep in mind that banks finance deals, the SBA only guarantees the debt for the bank And banks guidelines are almost always more restrictive than the SBA’s. If you have been declined, keep looking and find out why.

Commercial Mortgage Loan Vs SBA Financing

Highest loan to value in the business.?? SBA loans go up to 85% financing on refinances and 90% on purchases. In addition, it is common to roll all cost of a project into a loan. For example, if you where purchasing an office building for $800,000 and needed an additional $200,000 for renovations and equipment for $200,000, you would be able to get 90% financing on the $1,000,000

Most conventional financing would require you to put 30 – 40% down on the $800,000 purchase price and the renovation/equipment financing would be up for grabs.?? You would likely having to pay for those items in cash. On refinances, conventional commercial mortgage loans now rarely exceeds 60% loan to value.?? Again 85% with SBA vs. 60% conventional; this is the decision maker for many businesses.

25 year amortization with fixed periods ranging from 3, 5, 7, years is still available with the SBA. Conventional commercial financing is now capped at 3 -5 year fixed rates with amortization schedules rarely exceeding 15 – 20 years. These shorter amortization schedules increase monthly payments significantly and can be a serious drain on cash flow.

No balloon clauses with the SBA.?? SBA loans are fully-amortizing, meaning that they pay off by the end the amortization period. Most conventional loans will have a structure such as a 3 year fixed period, with a 10 year term, on 20 year amortization schedule. At the end of the 10 year term, the borrower faces a balloon.?? With SBA financing there’s never any pending balloon that could very well put the borrower in a bad position.

Relatively low prepayment penalties with the SBA loans. On a SBA 7a loan, the pre pay is 5% in year one, 3% in year two and 1% in year three, gone thereafter. The borrower is allowed to pay down the principle by up to 25% of the balance without incurring the prepayment penalty. Compared to the typical conventional prepay at 5% for 5 years or a 5% step down, the SBA pre pay is cheap and more flexible.

None of the above really discussed the most important point of all that SBA loan are the most viable and reliable sources of commercial mortgage loans in the business today. The credit crisis will likely to continue for another year or more. These loans are still closing while many conventional loans die while the loan is in underwriting, costing the borrower thousands of dollars and two to three months of wasted time and effort.

Should you refinance your Phuket property?
If you do refinance your Phuket home, the process will remind you of what you went through in obtaining the original mortgage for your Phuket home. That is because, in reality, refinancing a mortgage is simply taking out a new mortgage with the same bank or a different bank in Phuket. You will encounter many of the same procedures and the same types of costs-the second time around.

Would Refinancing Be Worth It?
Refinancing your Phuket home can be worth, but it does not make good financial sense for everyone. A general rule is that refinancing becomes worth if the current interest rate on your mortgage in Phuket is at least two percentage points higher than the prevailing market rate for properties in Phuket. This figure is generally accepted as the safe margin when balancing the costs of refinancing a Phuket mortgage against the savings.

There are other considerations, too, such as how long you plan to stay in the Phuket house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing.

Refinancing can be a good idea for Phuket homeowners who:

- Want to get out of a high interest rate loan with a bank in Phuket to take advantage of lower interest rates. This is a good idea only if you intend to stay in your Phuket house long enough to make the additional fees worthwhile.

- Have an adjustable rate mortgage with a bank in Phuket and if you want a fixed-rate loan to know exactly what the mortgage payment will be for the life of the loan.

- If you want to convert to an adjustable rate mortgage with a lower interest rate or more protective features (such as a better rate and payment caps) than the adjustable rate mortgage the bank in Phuket currently have.

- Want to build up equity more quickly by converting to a loan with a shorter term.

- Want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

If you decide that a refinancing is not worth the costs, ask your lender in Phuket whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan instead of a refinancing for your Phuket property.

Should You Refinance Your ARM?
In deciding whether to refinance an ARM you should consider these questions:

- Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?

- If the current mortgage with the financial insititution in Phuket sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing a new ARM or a fixed-rate enable you to pay your loan in full by the end of the term?

While over-obligating yourself or unexpected repair bills may jeopardize your ability to keep up your payments for your house in Phuket, the primary causes of foreclosure and bankruptcy in Phuket are unanticipated personal crisis. More homeowners in Phuket lose their homes because of illness, loss of employment in Phuket or marital problems than all other reasons combined.

An advance notice of a layoff means the family income will be severely cut back or eliminated in the near future. A major medical operation with a hospital in Phuket or property repair bill may be more than you can afford to repay, even with a short term loan from a financial institution in Phuket. You have to address the situation as soon as possible or risk losing your Phuket home.

There can be a number of local sources in Phuket that can assist you. Civic groups in Phuket may have assistance programs or may know what is available. Non-profit organizations in Phuket, may have special assistance programs. Local government and housing agencies in Phuket are also places to inquire for help and advise.

If your Phuket Mortgage becomes delinquent
The day of the month on which your mortgage payment in Phuket is due, usually the first day of the month, is set out in the mortgage note. Your payment is considered late if the financial institution in Phuket receives it after the due date, and the bank in Phuket usually will charge a late payment fee when the money is not received within 15 days of the due date (the timing and amount of late charges may vary from lender to lender in Phuket).

Payments made, including any late charges assessed, before the next payment due date will be accepted by the banks in Phuket, but if you owe two or more mortgage payments, your Phuket home is in serious jeopardy.

Unless specific arrangements are made with your lender, you must remit all payments and late charges before the money will be accepted and the loan considered current.

When three or more mortgage loan payments are due and unpaid, the loan may be given to the bank’s attorney in Phuket and foreclosure proceedings initiated. The entire balance of the loan with the bank in Phuket may be due and payable immediately. In addition to the loan payments due, you are liable for legal fees incurred by the lender. At this point, you are in serious problem of losing your Phuket home.

The willingness of the lender in Phuket to work with you to get past your current problems will depend heavily on your past payment record. If it shows consistently timely payments and no serious defaults, you will find the lender in Phuket much more receptive than if you have a record of unexplained chronic late payments.

If you are falling behind in your payments, or know that you are likely to in the immediate future, there are some steps that you should take before talking with the bank in Phuket about alternative payment arrangements.

First, you need to prepare a monthly list of your income and expenses in Phuket, using realistic figures based on your current financial situation. You will also need to put together a complete financial disclosure package, showing your Phuket assets and liabilities, including all debts and monthly payments and when they are due. Pay stubs, unemployment check stubs or other proof of current income in Phuket should be in the package, along with three years’ tax returns.

Get an estimate of the value of your Phuket property. You can usually get a local real estate broker in Phuket to give you an idea of the current market value, free of charge. Finally, prepare a written explanation of your situation to the bank in Phuket and offer any plan or suggestion you may have on how you can bring the loan current for your Phuket property.

Mortgage Loan Workout Plans
A loan workout plan is an agreement between you and your lender in Phuket that sets out the steps to be taken to cure the delinquency and prevent loss of your Phuket home. It may be written or verbal and will have specific deadlines which you must meet in order to avoid foreclosure of your Phuket. Therefore, it must be based on very realistic estimates of your ability to meet the plan schedule.

The nature of the workout plan will depend upon the seriousness of the default, whether your financial problems in Phuket are short-term or your payment ability has been impaired for the foreseeable future, your prospects for obtaining funds to cure the default and the current value of your property in Phuket.

If the default is caused by a very temporary condition and is likely to be cured within 30 to 60 days, the bank in Phuket may consider granting you temporary indulgence. Some examples of cases where this approach would be considered are where the house in Phuket has been sold but the sale has not settled or where an insurance settlement is pending on your Phuket property.

Any workout agreement is a last-ditch effort by you and your bank in Phuket to avoid foreclosure and keep you in your Phuket home. It is not a substitute for good budgeting and financial planning on your part and will probably not be available if your payment record has not been consistently good up to the present time. Lenders in Phuket will work closely with good borrowers in Phuket who are having a period of real emergency and hardship, but are not inclined to cooperate with those who demonstrate little financial discipline.