The SBA has streamlined the 504 loan application, approval and closing process. There is no excess or redundant paperwork. All the necessary forms and a loan check list can be downloaded here. Both the commercial loan and the SBA 504 loan use the same appraisal and environmental reports.
WIDC•Frontier loan officers are available to answer lender and borrow questions or to discuss project financing options.
Benefits For Commercial Lenders
With an SBA 504 Loan, commercial lenders have first lien position and typically a 50% loan-to-value ratio, minimizing collateral risk. Smaller lending institutions can participate in larger projects; larger lenders can limit exposure to a particular industry and/or borrower. Lenders can leverage lending capacity across more borrowers, diversify default risk and reduce loss in the event of default. Under most circumstances, the SBA can realize on its collateral only after the first mortgage lender is paid in full.
Banks that participate in SBA 504 loans may be eligible for Community Reinvestment Act (CRA) credit on certain projects.
SBA 504 loans are designed to finance growth companies. Business owners who are investing in a permanent facility, machinery, equipment or other capital assets are often entering into his/her largest business-related investment. An SBA 504 loan often becomes the basis of an entire banking relationship.
Contact us to schedule a free Lender Training seminar for your Commercial Lending Department. We will discuss the SBA 504 Loan Program, recent program changes, and the advantages to lenders and their small business customers.