Initial Evaluation and Term Sheet: A potential loan transaction is structured with a standard term of 12 months, with a possible 6-month extension contingent upon meeting specific benchmarks and payment of applicable fees. The loan includes a defined interest rate and required security. The broker initiates due diligence by obtaining a credit report for the borrowing entity and its principals. If the credit evaluation is satisfactory, a Term Sheet is issued to the potential borrower. Upon acceptance, the process advances.

Document Collection and Review: The borrower is required to submit the following: Formation documents (e.g., Operating Agreement for LLCs or Bylaws for corporations). Financial statements, including profit and loss statements, balance sheets, and the last six months of bank statements to verify cash flow and accuracy of representations. Financial statements, business history, and personal history of the borrower(s) and guarantors, including marital status, community ties, family history, prior business track record, references, and the purpose of the loan. A business plan detailing the use of funds and an exit strategy for loan repayment. If all documentation is satisfactory, the process proceeds.

Site Visit and Borrower Meeting: A face-to-face meeting is conducted with the broker and a manager from the lending syndicate to perform a site visit of the borrower’s enterprise and, if applicable, the surrounding area. The meeting includes discussions regarding all provided information. If the lending syndicate determines the transaction is viable, the process continues.

Due Diligence and Approval: Comprehensive verification of all submitted information is conducted, including: Obtaining a title report from a licensed, regulated title company to assess the status of the real property’s title and identify any issues requiring resolution. Securing a Title Commitment from the title company for the loan. Performing an in-depth financial analysis and market review of the borrowing entity and its guarantors. If the due diligence results are satisfactory, the lending syndicate approves the loan and forwards the decision to the affiliated law firm for document preparation.

Loan Document Preparation: The law firm drafts the following loan documents:

a. Loan Agreement

b. Real Property Security Document (Deed of Trust or Mortgage, depending on the state’s legal framework).

c. Promissory Note

d. Guaranty Agreement for the principal(s).

e. Uniform Commercial Code (UCC) Filing or Security Agreement covering personal property, including contracts, bank accounts, fixtures, machinery, and other business assets (excluding real property). Drafts are sent to the borrower or their counsel for review, and any issues are resolved collaboratively.

Closing and Funding: The borrower and title company are notified to arrange the closing. All documents are executed, notarized as required, and submitted to the appropriate jurisdiction’s recorder’s office for recordation. The title company provides recording confirmation to the lending syndicate. Upon confirmation, the lending syndicate funds the loan to the borrower.

Borrower Responsibilities: The borrower is responsible for all associated fees, including but not limited to broker fees, credit report costs, title company fees, title insurance for the loan documents, and legal fees for document preparation.

• Advance Payment Requirement: Borrowers are required to provide six months of post-dated checks, each dated for the first day of the month, corresponding to the monthly payment schedule outlined in the Promissory Note.

• Non-Sufficient Funds: In the event of a returned check due to insufficient funds, the borrower may be subject to criminal charges, as permitted by applicable law.

• Late Payment Penalties: If payment is not received by the fifth day of the due date, a late fee of 5% of the overdue amount may be assessed. At the Noteholder’s discretion, the default interest rate will apply, increasing the interest rate by 5% above the rate specified in the Promissory Note.

• Governing Law: Loan documents are governed by the laws of the Commonwealth of Virginia, which are highly favorable to lenders due to the abolition of usury laws and the recognition of commercial lending agreements as defined by the executed documents. While commercial loan documents generally govern, they remain subject to the laws of the state where the property is located.

• Lending Focus and Security Instruments: Our lending activities are concentrated in Washington, D.C., and its metropolitan areas. Secured transactions utilize Deeds of Trust as the primary instrument against real property. The Lender appoints and may substitute the Trustee named in the Deed of Trust, typically utilizing attorneys from our affiliated law firm to serve as Trustees and initiate foreclosure proceedings as necessary.

• Foreclosure Process: Foreclosure proceedings vary by jurisdiction, with timelines ranging from 15 days to longer, depending on local regulations. While our documents provide for non-judicial foreclosure, the laws of the state where the real property is located govern the foreclosure process, distinct from the laws governing the underlying Note.

• Borrower Obligations: All costs, expenses, and fees, including but not limited to late fees, default interest, legal fees incurred from the date of default, court costs, and filing fees, are the responsibility of the Borrower. In the rare event of a completed foreclosure, the total amount due to the Trustee will include the outstanding Note balance, accrued late fees, default interest, legal fees, and court costs.

• Security Agreement: Concurrently with the loan agreement, the Borrower enters into a Security Agreement, which includes a UCC filing covering, but not limited to, bank accounts, accounts receivable, and personal or entity property of the debtor.