"Your Lending Partner"


SBA 504 – A Partnership with Lenders

by John Reichard on Tuesday, October 6, 2015 11:00 AM

We here at SEDA-COG and our lending partners want to see small businesses grow and succeed. Our SBA 504 loan program is the perfect fit for this and builds partnerships within our community.

Some lenders may view the SBA 504 program as a competitor in the lending marketplace, but banks are an important and valued partner because every SBA 504 project needs a senior lender.

Today, I want to showcase how we form important partnerships with banks and the tremendous benefits of the 504 loan program, making it a win for the borrower and the lender.

The SBA 504 loan program benefits the borrower and the bank. It offers an attractive package with a fixed-rate, long-term component and minimal down payment – and this helps banks land the deal.

Small businesses typically shop their financing needs to several banks, and the institutions that add an SBA 504 loan to the financing proposal (with as little as 10 percent down and 40 percent of the project financed at a 20-year fixed rate) gives that bank a competitive advantage.

And it’s a deal banks want. Banks earn interest on the bridge financing, and can profit from selling their 50-percent first mortgage loan in a 504 deal for a premium.

We bridge the gap and decrease lenders’ risk. If a borrower falls short of underwriting criteria or the 20-25 percent down, adding the 504 loan may be key to making the deal work. If you’re a smaller bank, the 504 loan can act like a participating lender so you can do the deal and keep your customer.

We make the 504 loan process simple and easy for banks and borrowers. We know time means money, so we navigate the process and get through the red tape for you so you can get onto business.

In short, we know banks and borrowers have needs, and the SBA 504 loan program can meet both. Partnering with us on this program can help banks form long-lasting relationships with customers as we work together for their best interest.

So let’s start now. We’re looking forward to the partnership!

John Reichard

Information related to the SBA 504 loan program for small businesses.