The 504 Loan Program is beneficial to both the lender and the borrower. Community Business Finance presents three great reasons that community lenders will love the 504 Loan Program.
You Do Not Need SBA Certification
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.
You Can 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.
You Minimize Your Risk
Since the 504 Loan Program funds the purchase of real estate and equipment, the loans are collateralized, lowering the probability of loss. Combined with the first lien position on the total project cost with only 50% exposure, your risk is significantly minimized.
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:
Business Development Director
800-462-1017, ext. 203
713-457-1650, ext. 201