The funds needed for the down payment plus any upfront costs required during the processing and underwriting of the loan is the required cash. An SBA Lender calls this required cash, “the Borrower’s cash injection.”
Another portion of the cash required is any processing fee or underwriting fee and “third party costs” needed to complete the underwriting of the loan. The third party costs may include a business appraisal or real estate appraisal, construction supervisor fees, environmental report fee, legal research fee, etc.
These are known as “upfront costs”. There is no set industry standard for when these upfront costs are paid. They may be due any time from when a “Letter of Interest” is provided to after the Commitment Letter issued.
Borrowers must have the cash needed for the transaction in a bank account for three months
prior to closing. If the Borrower does not have all the cash, the Borrower can qualify with a
gift from another source. On a case-by-case basis, borrowing the funds from investment
property or another source may qualify the Borrower.