I got a SBA loan after the Hurricane. I needed a second draw. It required a wind-insurance home owners policy. I gave the company l/4 payment, then got some funds from SBA. What would happen if I cancelled the policy? I don't need any more funds from the SBA.
2007-03-06 08:08:36 · 4 answers · asked by tobeyp2005 3 in Business & Finance ➔ Insurance
The SBA can come after you for the full amount.
Also, if you bought the wind coverage through a state pool, if you cancel the policy mid term, you don't get any money back.
2007-03-06 08:46:59 · answer #1 · answered by Anonymous 7 · 0⤊ 0⤋
I don't know at what point in time the SBA does their Due Diligence or may be audited and your file is pulled for review.
If the findings are that you are not in compliance with their criteria they could default the loan and require immediate lump sum repayment.
Or the future may reveal that the SBA will link you to another Sister agency to help you along your business growth cycle and you would want to keep your current SBA account in good standing.
2007-03-06 16:15:58 · answer #2 · answered by Ronatnyu 7 · 0⤊ 0⤋
As long as you have the loan with SBA you have to carry your insurance. If you cancel or do not renew, SBA will get a cancellation notice from your insurance company, and will have you purchase new insurance OR they will purchase insurance on your behalf and add the premium into your payments. If they purchase, they will not try to get the best deal on the premium, they will just purchase insurance so they are covered in case of damage. I'm sure if you look through your loan papers, somewhere it will tell you this.
2007-03-06 16:14:12 · answer #3 · answered by Kathleen M 4 · 1⤊ 0⤋
I would say that like any loan that you default on the conditions for - if they find out they can call the entire amount of the loan due & payable NOW. But that's just my opinion & experience having worked in escrow.
2007-03-06 16:14:25 · answer #4 · answered by ang_phx 3 · 0⤊ 0⤋