Are you a commercial lender focused on small business banking?   If so, let’s look at how a little “thinking outside the box” can help you approve more deals.

We all recognize Netflix, Apple, Uber, and Airbnb as industry change agents.  These are companies that recognized gaps in the service offering of their respective field and, by re-imagining the concept, turned the entire industry on its head.

So, how does this apply to commercial lending?

We’re all guilty of, at times, waiting for opportunities to land on our desk.  However, meeting with your clients regularly and knowing their goals, roadblocks and challenges allows you to proactively pursue solutions…possibly before your client even realizes there’s an issue.  Are they looking to grow and when?  What types of loans do they currently have and when do they mature?  Do they own their business property?  Will they soon be forced to comply with costly renovations set forth by a franchise agreement?  Do they need to replace a piece of equipment?  Have they been facing skyrocketing rent increases?  Is a future road construction project going to hinder the ingress/egress of their business?  Do they have a balloon payment coming due?

These are just a few of the obstacles your clients may be facing.  Do they have them on their radar?  Or is this an opportunity for you to be the change agent and turn commercial lending on its head?  Channel your “outside the box” thinking, arm yourself with the SBA 504 Loan Program’s benefits and array of financing solutions, and let’s make it happen.

Project-Specific 504 Solutions



Green Energy

Equipment purchases Real estate loans New builds w/sustainable energy
Building acquisitions Lines of credit Energy efficient upgrades
Land purchases Consolidate multiple loans Energy generating equipment
New construction Obtain working capital
Leasehold improvements
Furniture & fixtures
How the 504 Helps
How the 504 Helps
How the 504 Helps
Long-term fixed rates Eliminates balloon payments Removes $ limit on 504 portion
Long loan terms – 10, 20 or 25-yrs Fully amortized for up to 25 yrs Borrowers can take multiple loans
No future balloons Existing equity=down payment Slashes the bank’s risk to 50%
Low down payments Can provide a cash-out option Up to $5.5 million per project


Practical Examples of “Thinking Outside the Box”

A stalled expansion got back on track…

A wholesale bakery near Jacksonville, nearing the end of a lease term, received news their business property was being sold and needed vacated.  Facing an inevitable move, the business owner decided to make the most of the situation and began to seek a property that would not only house the business but would also allow for expanded production.

Nearby land was purchased, and construction of a larger building began.  However, due to cost overruns, conventional financing could no longer allow for the completion of the construction…the borrower suddenly required a higher advance rate than the bank could offer.  Exploring alternative options in hopes of getting the expansion back on track, the lender suggested the 504 Loan Program and they found it to be the perfect solution.

The participation of the 504 Loan Program allowed the bank to offer a 90% advance, which gave the business the financing they needed to pay contractors and finish the project.  The new location offers ample space to produce, distribute and sell an expanded line of bakery items.


A balloon payment was looming…

A manufacturing company near Chicago was four years into their mortgage payments and business was booming.  However, with a five-year term loan, the balloon payment was quickly approaching.  The Lender stepped in well in advance of the “crisis” and offered a recommendation for refinancing with the SBA 504 Program’s Refinance Loan…a long-term financing option with low fixed interest rates.  This allowed the client to stabilize their expenses and spread their predictable payments out over 25 years.


The conditions of a franchise agreement came with a steep cost…

A company in Southern Illinois was facing major renovations and energy-saving upgrades on two facilities in order to comply with the conditions of a franchise agreement.  The cost was steep.  With salaries and other expenses, working capital was hard to come by and it appeared the assistance of the SBA was out of the question because the costs were higher than SBA’s lending limits would allow.

Since the renovations included the energy component, an SBA 504 “green” loan could be used which allowed for up to $5.5 million per project.  The borrower was able to capitalize on all the benefits of SBA loans, including low equity injections and long-term amortizations, while fulfilling the renovation requirements set forth in their franchise agreement.  A little creativity by the commercial lender saved the day.


The Payoff

Essentially, the 504 Loan Program is a smart way to differentiate your bank.  Not only will you be helping local small businesses achieve their goals and fulfill their dreams, you’ll help your bank power ahead as well.  Here’s why:

  • Mitigated Credit Risk – Lenders have first lien position and typically a 50% loan-to-value ratio, thus minimizing collateral risk
  • Entertain Bigger Projects and/or Limit Exposure to Certain Industries – again, the 50% LTV is a key benefit to banks
  • Attract and Retain Customers – Because 504 Loans are designed to finance growth companies, they can be the basis of a long banking relationship when that entrepreneur places their deposits in your bank and returns for additional business financing as the company grows
  • Strengthen Earnings – The bank sets the pricing on its first mortgage loan. Plus 90% financing means more of the borrower’s dollars remain on deposit.  The bank also earns fees and interest on the interim loan.
  • Earn CRA Credits – Banks that participate in the 504 Loan Program are eligible for Community Reinvestment Act credit on certain projects
  • Enhanced Community Image – A bank that demonstrates support of its local small businesses is also showing support for the economic development of its community.

When you take the long-view on every client, you’ll undoubtedly open yourself up to referrals, retentions and new business opportunities.  After all, one of the greatest satisfactions in your career is helping someone achieve their goal.  Constantly asking yourself how you can better understand your clients’ businesses will help identify even more areas where you can add value.


Growth Corp is a nonprofit, mission-based lender dedicated exclusively to connecting small businesses with quality expansion capital through administration of the SBA 504 Loan Program. With a commitment to economic development, job creation and the small business sector, Growth Corp is ranked a Top 10 National CDC for SBA 504 loan volume and is Illinois’ largest 504 loan provider.  Contact any member of our Lending Team to discuss your small business banking needs.