AVANA Knowledge Challenge
AVANA Knowledge Challenge
Test your knowledge of AVANA's investment strategies, loan processes, and general financial concepts through the AVANA Knowledge Challenge! This quiz is designed for anyone interested in commercial real estate loans and SBA programs.
- Explore 27 carefully crafted questions.
- Engage with multiple choice, checkboxes, and open-ended formats.
- Receive insights into commercial lending and financial benchmarks.
What is the expected average yield on AVANA’s Fixed income fund for loans that have a duration of 90 days to 60 months per annum?
6.50% to 9%
6.75% to 9%
8.50% to 10%
None of the above
What is AVANA’s investment strategy?
To achieve steady income from a diversified investment portfolio of owner occupied commercial real estate debt assets (loans) characterized by a low to moderate level of risk
Loans will be purchased from various financial intermediaries who are experienced commercial real estate lenders who are also specialists in United States Government Guarantee Loan Programs (GGL).
To thoroughly evaluate eligible loans and purchase from SBA’s loan programs (SBA) 504, 7(a), USDA B&I/REAP) loans, development, conventional and bridge opportunities.
All of the above
Once a decision has been made to proceed with a borrower transaction, the AVANA team will engage external counsel and third party service providers to begin preparation of loan documentation. What part of AVANA’s due diligence includes the above process?
Portfolio Servicing
Loan Closing
Loan Origination
Deal Origination
Which company does AVANA use for title and escrow?
Fidelity National Title
AVANA Fund I
Quarles and Brady
None of the above
What is the maximum amount of loan under the SBA 504 program?
A.$5.5 million
B.$5 million
C.$6.5 million
A and b
A and c
A GGL loan program where the general purpose is for economic development that can be used for a wide range of projects, including renewable energy projects.
Conventional loans
SBA 504
USDA B&I/REAP
SBA 7(a)
For Type B note investments, what are the considerations AVANA must take for the initial investment offering?
AVANA will consider conventional interim real estate debt (loans) for owner-occupied commercial real estate where the businesses have already qualified for a US government loan program but have drawn the maximum benefit from these government loan programs.
Notes are committed to the senior tranche, 1st trust deed which is the most senior debt position in the capital structure are with lien property to the SBA’s funded position.
Participation in the unguaranteed senior tranche, 1st trust deed which is the most senior debt position in the capital structure, pari-passu with the USDA’s guaranteed portion.
All of the above
A nonprofit corporation that promotes economic development within its community through 504 Loans. It is authorized and regulated by the SBA, and work with SBA and participating lenders (typically banks) to provide financing to small businesses.
Government Guaranteed Loans program (GGL)
Certified Development program (CDC)
Department of Agriculture (USDA)
Office of Financial Assistance (OCA)
1. 504 Loans are typically structured with SBA providing 40% of the total project costs, a participating lender covering up to 50% of the total project costs, and the borrower contributing10% of the project costs. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs.
True
False
The following are part of the Credit Memo/Credit write up except:
Demand drivers, macro-economic factors and industry overview and market positioning.
Term sheet to prospective borrowers for discussion
Cash flow analysis of historical and proforma financial information
Property collateral summary from appraisal, environmental, property condition assessment and survey.
What is our typical payment date and when is it considered late?
Every 1st of the month and will be considered late after the 10th of the month
Every 15th of the month and will be considered late after the 20th of the month
Every 10th of the month and will be considered late after the 15th of the month
Every 1st of the month and will be considered late after the 15th of the month
Type of costs includes construction building materials that go into constructing the building including Site work, actual construction costs which include the foundation and framing.
Soft Cost
Hard Cost
Project Cost
Contractor Cost
For the 1st lien position on an SBA 7(a) loan, the Bank takes best available lien on all business assets with guarantee from SBA.
True
False
The borrower needs to provide the following during the underwriting process except:
Financial Statements
Income Tax Return
Resumes
Collateral Valuation
What does DSCR stand for?
Debt Service Coverage Ratio
Debt Standard Coverage Ratio
Debt System Coverage Ratio
Debt Sample Coverage Ratio
How is DSCR calculated?
Net Income plus Interest plus depreciation plus amortization
Divide earnings before interest, depreciation and amortization over the total of the Company’s loan payments for a certain period.
Liquid cash minus the closing costs and equity for the loan.
None of the above.
It is the Net Operating Income of the property divided by the value of the property, typically for hotels, it is 8% to 9%, for offices its 7.5% to 8%.
Debt Yield
EBITDA
Capitalization Rate
Trip Advisor Rating
Does a Loan document set out exactly who the borrower should contact in the event we have a default?
True
False
Loan documents allow us to go back in time and charge a revised interest rate in a rising interest rate environment when servicing forgets to amend the rate?
True
False
From a fund perspective, what is the most important to us on the loan grade?
DSCR
Post Closing Liquidity
Liquidation value
NET operating income
In Servicing, what steps would you introduce if the loan payments were NOT on time?
A. Call Borrower to follow up and inquire on the reason for the delay
B. Issue default letter after 30 days of delay
C. Call SBA and inform that loan payment is in default.
A and b
A and c
This is an insurance policy that insures the Lender of the loan amount should the General Contractor fail to deliver and complete the Project.
Borrower’s collateral
Payment/Performance bond
Property Insurance
Security Deed
The amount charged as a percentage of the loan for the use of the lender’s funds. In our loan agreements, this is subject to change from time to time based on changes in an independent index which is generally the Prime Rate as determined by the Federal Reserve and quoted in the Wall Street Journal.
Post Closing Liquidity
Loan to Value
Interest rate
Servicing Fee
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