Commercial Loan Documentation for Community Banks

Yes. Many law firms prepare commercial loan documents for community banks at a set fee per loan, based on the loan type. A fixed fee makes closing costs predictable for the bank and the borrower, and it encourages a steady, repeatable process. The fee usually covers the core documents, review of the borrower's organizational documents, and basic searches, while extras such as additional entities, negotiations with borrower's counsel, or out-of-state collateral are priced separately. Kennedy Sutherland LLP prepares commercial loan documents and offers fixed-fee loan documentation packages. Fixed-fee packages available. Call 210.259.3885 for a quote.

A typical Texas commercial real estate loan includes a promissory note, a loan agreement for larger or more complex loans, a deed of trust that gives the bank a lien on the property, an assignment of leases and rents, guaranties from owners, and an environmental indemnity. Many loans also include a security agreement and UCC financing statement for fixtures and personal property, and for tenant-occupied property, subordination, non-disturbance and attornment agreements or estoppel letters. The bank's counsel also reviews the title commitment, survey, insurance and borrower's organizational documents, and sends closing instructions to the title company. Texas deeds of trust usually allow non-judicial foreclosure, which makes careful drafting important.

A Texas construction loan agreement should cover the loan amount and budget, how and when draws are requested and funded, required inspections and lien waivers, retainage, the borrower's equity and when it must be spent, completion deadlines, cost overruns and change orders, insurance and bonding, and what happens if construction stops. The bank usually takes an assignment of the construction contract and the architect's agreement, with consents from the contractor and architect. Texas mechanic's and materialman's lien rules in Chapter 53 of the Property Code affect timing and priority, so the deed of trust should be recorded and work should not start before closing.

For SBA 7(a) loans, the lender or its counsel prepares the loan documents to match the SBA authorization and SBA's standard requirements, and some SBA forms must be used. For SBA 504 loans, there are two sets of documents: the bank prepares the first-lien loan documents, and the Certified Development Company and its counsel prepare the documents for the SBA-backed portion. USDA guaranteed loans follow a similar approach, with documents matched to the USDA conditional commitment. Because SBA and USDA can deny a guaranty for documentation errors, banks often use counsel who knows the program checklists. Kennedy Sutherland LLP prepares SBA and USDA loan documents for community banks. Call 210.259.3885 to discuss pricing.