Attention lenders: when small business owners approach your bank looking for a loan to purchase commercial real estate or heavy equipment for their growing business, are you prepared to meet their needs? What if they lack a sizable down payment?
SBA 504 Loan Program
The SBA 504 Loan Program can be the ideal solution to meet the financing needs of your borrower, while still delivering significant benefits to you as their lender. The Program was created in the 1980’s to support small businesses and strengthen the economy. This type of loan is actually a partnership of three components, involving:
- A conventional bank loan (first mortgage) of approximately 50% of the total project costs
- A second mortgage of approximately 40% of the total project costs from a Certified Development Company (such as Growth Corp)
- A down payment of approximately 10% of the total project costs from the borrower
While the 504 Loan Program offers many benefits to borrowers, it also truly helps provide a solution to many common lending challenges:
The structure of the 504 reduces lenders’ exposure, thereby managing commercial real estate concentration issues and opening up lending availability. Reach out to new borrowers or better serve existing clients.
As a busy lender, you have a lot on your plate. Growth Corp’s experienced team of Loan Officers take care of all the paperwork required for the 504. And, you can trust us to get it right. We are one of the top ten CDC’s in the Nation and the Largest 504 Lender in Illinois.
Maximizing Middle Market Lending
Middle market lending is becoming the bread and butter for many banks. Therefore, let’s dispel the rumor that the 504 is just for small businesses. With high size limits and high caps for 504 loans, the middle market segment is a perfect match for the 504.
Loans With High Loan-to-Value Ratios
The 504’s Refinance Program offers an opportunity for good borrowers to refinance their higher interest loans. This is perfect for borrowers facing balloon payments or for those looking to fix their occupancy costs over the long term.
Risk and Stability
With Growth Corp’s 504, lenders considerably reduce their lending exposure to just 50% AND get first lien position.
Getting An Edge Over the Competition
With three different financing options to choose from, high size limits, high loan caps, low equity requirements and long loan terms, the 504 is a unique marketing tool for getting an edge over the competition and attracting new borrowers.
Whether this is your first experience with the SBA 504 or it’s been awhile since you’ve been through the process, we’re here to help. We’ve put together a Lenders Guide that will help guide you through the SBA 504 process. And remember, any time you have questions, our Lending Team is ready to assist.