Frequently Asked Questions

Q. If I have a prior bankruptcy, am I eligible for a business loan?

A. Generally, all commercial lenders including RLDC and SBA prefer that a prior bankruptcy be at least 5 years or more prior to loan application and that good credit has been reestablished subsequent to the bankruptcy filing although exceptions may be made. If your prior bankruptcy resulted in a loss to the federal government or if you have ever defaulted on a prior government loan that caused a loss to the government including but not limited to a student loan, you are not likely eligible for an SBA loan of any type.

Q. I have some credit problems from the past. How good of a credit score do I need to be eligible for a business loan?

A. Commercial lenders including RLDC and SBA want to see that you are current on all your debt and that derogatory marks from your past are at least a couple of years old and fully explained.

Q. If I have a prior arrest record, am I automatically denied a business loan?

A. SBA has policies that must be adhered when a prior arrest is reported. A full description of the offense and its resolution is required (contact RLDC for instructions). A single misdemeanor charge that is from the distant past will generally not delay a loan approval appreciatively and will generally not result in a loan denial. Multiple misdemeanors particularly in the recent past or a felony charge require review and approval by SBA including a review of fingerprints.

Q. Must I personally guarantee a business loan?

A. With few exceptions, all business loans require a personal guarantee of some degree. Commercial lenders want to be certain the borrower is fully committed to success of the business and repayment of its debts. For SBA loans, any owner of 20% or more of the business is required to provide a guarantee of the entire debt. Owners of less than 20% may be required to provide a partial guarantee or a full guarantee depending upon their importance to the success of the business and other factors. However, owners with less than 20% ownership generally are not required to guarantee any of the business debt. All SBA loans require personal guarantees at some level depending upon the ownership and circumstances and nature of the business.

Q. Do RLDC loans require a prepayment penalty?

A. All SBA 504 loans have a prepayment penalty for the first half of the term of the loan (10-year prepayment penalty on a 20-year loan and a 5-year prepayment penalty on a 10-year loan). The prepayment penalty is paid to the investor who purchased the underlying bond supporting the loan and not to RLDC or SBA. The amount of the prepayment penalty is a function of the interest rate at the time the bond is sold and declines throughout the term of the loan. Loans from RLDC may or may not have a prepayment penalty depending upon the loan terms and conditions. An RLDC loan officer will notify you in advance of any prepayment penalties required. Banks generally have prepayment penalties if the loan is prepaid from proceeds of another bank loan. You should ask your banker about any prepayment penalties required.

Q. Do I need a business plan?

A. All start-up businesses require a business plan and the formulation of a business plan is an invaluable exercise for a prospective business owner to be certain the venture is a wise investment of time and capital. For an existing business in operation for two or more years, you will need to provide complete financial information to your lender(s) and help them understand the nature of your loan request and the impact on the business. Projected financial statements may be required to support your loan request.

Q. If SBA is guaranteeing my loan, why wouldn't I automatically be approved?

A. SBA requires its lending partners to exercise due diligence in underwriting, closing and servicing SBA guaranteed loans and SBA lenders have a risk of having their SBA guarantees denied for failure to properly assess and mitigate a potential loan loss. Moreover, SBA lenders have exposure to loan losses despite the SBA guarantee.

Q. Can expenditures made in advance of a loan request be counted as my capital injection?

A. Prior expenditures may be counted as capital injection in certain circumstances but only when they can be fully documented.

Q. Must my loan be fully collateralized?

A. All SBA 504 loans are fully collateralized by the fixed assets being financed. In the case of equipment, total bank and SBA 504 debt cannot exceed 90% of its cost. For real estate, SBA requires that the real estate appraisal (As Completed) be at least as much as the total bank and SBA 504 debt. For RLDC micro loans, all terms and conditions including collateral requirements are negotiable.

Q. How long does it take to receive loan approval?

A. Generally RLDC can provide loan commitments from its various loan programs within 30 days of receipt of the required information necessary to underwrite a loan.

Q. What fees are associated with securing a loan from RLDC?

A. For SBA 504 loan fees, see the DISCLOSURE STATEMENT REGARDING 504 LOAN CHARGES AND PROCEDURES. For RLDC micro loans, the closing fee is generally $100-$150 depending upon loan complexity plus recording costs, title insurance and other out-of-pocket expenses incurred in processing and closing the loan.

Contact Us


120 W. State St.,
Suite 306
Rockford, IL 61101
P: 815-987-8675
F: 815-968-4157


120 W. State St.,
Suite 306
Rockford, IL 61101
P: 815-987-8675
F: 815-968-4157



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