Many lenders may not be aware they are able to offer SBA loans, and these loans are beneficial to both the lender and the borrower. Community Business Finance presents three great reasons that community lenders can and should offer the 504 Loan Program.
Reason 1: No SBA Certification Required
Many lenders believe they have to be a certified SBA lender to offer any SBA loans. The truth is that the SBA does not require a lender to be certified to participate in the 504 Loan Program because these loans require partnership with a Certified Development Corporation. This means a lender can start offering 504 loans today.
Reason 2: Participate in Larger Loan Amounts
In the 504 Loan Program projects are typically financed with two loans: a first lien loan through a commercial lender for 50% of the project cost and a second lien loan for 30% - 40% of the project cost, financed by Community Business Finance. The borrower provides a 10% - 20% down payment. By only lending 50% of the total project cost, a lender can participate in much larger projects without exceeding their lending limit.
Reason 3: Minimize Your Risk
The 504 Loan Program offers loans for the purchase of real estate and equipment. This means lenders have first lien position on the total project cost with only 50% exposure. 504 loans are collateralized with a lower probability of loss.
Community lenders may not realize what they are missing by not offering the 504 Loan Program to their customers. For real estate and equipment, 504 loans have better interest rates with longer amortization and lower down payments. These terms are attractive to borrowers and prevent lenders from losing the loan to another bank.
To learn more about Community Business Finance's 504 Loan Program visit our 504 School, or contact our offices:
You can also contact our offices:
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at firstname.lastname@example.org.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017, or email her at email@example.com.