Important: SBA suggests rounding the Project Costs to the nearest thousand to avoid getting into the Rounding situation.

Q: My Financing screen shows the breakdown of my 504 loan but the total does not equal 100.00%. It is currently showing 99.99% or 100.01%.

When putting together the structure of your 504 project, you may run into an instance in the Financing > Financing area where the amounts that are being used for the TPL, SBA Debenture and Injection do not give you a total project % of 100.00%. You may see the total showing 99.99% or 100.01%. Why does this occur?

1. ETRAN rounds the project percentages to 2 decimal places when your financing amounts are entered into ETRAN. This is important to remember as ETRAN may validate against projects that do not add up to an even 100.00% and may prevent you from submitting your application into their system.
   In ETRAN, you can see that the same Amounts would add up to 100.01%.
   
2. Because ETRAN rounds to 2 decimal places, the Ventures Financing area also rounds to 2 decimal places to match.
   

When do we most often see this situation occur where the total project percentage is not an even 100.00%?

1. When the project is a 504 REFI project and the senior lender and debenture amounts are not the usual 50/40/10 break down.
2. When doing a post-approval 327 and the project cost total has changed requiring a new financing breakdown.
3. The combination of your project total and financing just happens to create this situation through no fault of your own.

What are the options to fix the rounding of percentages?

The only resolution to make the rounding total 100.00% would be to reallocate the funding sources to account for the rounded percentages. Which amounts you adjust will be different based on your individual situation. When adjusting your amounts, please remember the limitations for 504 projects.

1. The Injection cannot be less than 10.00%.
2. The Debenture cannot be more than 40.00%.
3. The Total Amount in sources must equal the Total Eligible Project Costs.

Based on your individual situation, some amounts can be adjusted while others will be difficult to adjust. For instance, you may not be able to adjust the Third Party Lender amount if the lender does not wish to change their portion. This can limit what you can adjust in order to hit the 100.00% target.

Example Resolution

Using the example from the image above, we can take a look at a situation where you are unable to change either the TPL amount or the Net Debenture amount. Because you cannot change either amount, the only option you have available is to change the Equity Injection and adjust the Total Project Cost to match. In this example, a drop in $100 in the Equity Injection would bring the percentages down just enough to hit 100% with a new project total.

This is just a simplified example of what can occur but the thought process will be the same for other situations. What amounts are you able to adjust in order to bring the rounding into balance and how does that affect the project? In the above example, it looks like a simple adjustment but changes to both the Equity Injection and Total Project Cost may require you to reach out to your borrowers and your loan committee to explain why these changes needed to be made. We recommend that you test out these percentages as early as possible in Ventures before finalizing any amounts for the project so that you can minimize the situations where you are stuck with specific amounts that cannot be modified.

TIPS

• If the amounts are greyed out in Ventures, you can manually input amounts into the Ventures Financing area by removing the Target %. KB: Removing Target Project Percentage
• SBA recommends that you use amounts that are rounded to the hundreds to minimize the risk of a rounding issue. There will still be some instances where the percentages do not add up evenly to 100.00%.