Why doesn’t the SBA 504 loan fund immediately after closing?
Answer: This is because of 2 things: 1) the volume of loans submitted for funding and 2) the complexity involved with selling debentures to investors takes time.
After SBA 504 loan closing, the loan is ready for funding. Each month the loans are pooled with several hundred loans across the nation. In order to manage this kind of activity, schedules must be set. There is a scheduled date each month when the closed loans must be received by SBA. The SBA reviews the closed loan packages and approves them for funding the following month. The funding process then involves a servicing agent, fiscal agent, underwriters and trustees to issue the debentures and fund the loans.