Sometimes a prospective or current customer falls a little short of qualifying for conventional bank financing, but you would like to help. Including an SBA 504 loan as part of a financing package could provide the following benefits to the bank as well as the customer:
Advantages for Lenders
- Finance larger projects by spreading risk with a lower loan-to-value ratio.
- Finance in specialized markets and/or specialized equipment.
- It gives your small business client access to capital markets without the high expense of bond counsel.
- Blended fixed/variable rate with re-pricing capability on your loan.
- A large portion of the project is financed at a ﬁxed rate.
- Offers creative financing to differentiate your bank in the marketplace.
- Hedge your client’s exposure to interest rate increases.
- It gives your client a cushion in the credit limit and allows you to keep those cultivated relationships without affecting your legal lending authority or reserve requirement.
- The long-term fixed rate leaves more money available in your customer’s cash flow to pay your debt service.
- CRA credits on the SBA portion.
- A market for the purchase of the first lien mortgage.
- No reporting compared to 7 (a) lending.
- No need for SBA training or experience. SEDA-COG handles the entire process.