Lender Advantages

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.