Procedural Changes for 2014

SBA released a new SOP, 50 10 5 (F), for 2014 with many of the modifications affecting the administrative and procedural components of the 504.  Participating lenders and borrowers probably won't even notice most of the changes as they primarily involve the interaction between CDC's and SBA.  There are, however, a few changes you might want to keep in mind when thinking 504:

• Insurance:  Insurance coverage on the assets financed with 504 has been required by SBA for years.  However, the new SOP adds a layer:  if the state requirements are more than SBA requirements, or the state requires a business to carry specific insurance, then that business must prove it has the state required insurance.

• Guarantors:  The 20% or more rule still applies.  However, the 504 must have at least one guarantor, even if there are no 20% or more owners.

• Religion:  Businesses promoting religion are ineligible, but there are some businesses that may now be eligible.  SBA has developed a checklist to help determine if the project that involves religion would be eligible.  (Form 1971)

• Businesses Engaged in Lending:  Businesses with the primary purpose of lending are not eligible for 504.  However, SBA has added the following exception to this rule:  Financial Advisors.  To be eligible, the Financial Advisors' services must be fee-based and funds cannot be invested in their own portfolio of investments.

• Multiple 504's:  The 504 portion of most projects cannot exceed $5 million, but there are certain circumstances where this can be exceeded (mostly manufacturing).  Should a business meet the eligibility requirements for multiple 504s in excess of $5 million, SBA will determine if multiple loans in excess of $5 million to a borrower meets their prudent lending standards.

Remember, should you have any questions or need personalized lender training, contact us.  We are happy to come on-site and respond to your questions or conduct a training seminar with your commercial lending team.  http://www.growthcorp.com/ContactUs.aspx

Lenders, Let's Kick off 2014

We can’t start a new year without first thanking you, our Lending Partners.  We could not have had the year we had without your unwavering support and commitment to the 504 Loan Program.  For all your hard work and loyalty, we thank you!

Before we kick off 2014, let’s take a look at where we stand.  The past year was challenging because lending slowed fresh off the heels of the Temporary 504 Debt Refinance program.  However, because of those circumstances, we took a good look at ways we could improve, put a focus back on the basics and are standing strong ready to serve you in 2014.  Growth Corp is more motivated than ever to build local communities one business and one job at a time through administration of the 504 Loan Program.  We continue to be the largest 504 Lender in Illinois and one of the top ten CDC’s in the nation.  Our portfolio also continues to grow…a feat we are quite proud of.
 

So, let’s kick off this New Year…
 

First, a quick reminder of the benefits the 504 provides to lenders.  You already know the 504 reduces your risk with a lower loan-to-value ratio and first lien position on the project property.  But, don’t forget…the 504 allows lenders to set the terms for the bank portion of the loan and fulfills CRA goals.  In addition, Growth Corp takes care of all the paperwork and has accreditation with SBA to get loans processed quicker. 
 

Second, why not expand your lending services to your current borrowers or market new services to potential borrowers?  Offer the option to refinance qualifying debt with a new expansion project.  Or, let borrowers know they can qualify for higher 504 loan amounts if their construction or remodel includes going “green”.  And, what about reminding borrowers they can use the 504 multiple times.  So, if someone recently purchased real estate with the 504, why not reach out and see if they have a new equipment purchase in mind or a remodeling goal?
 

Finally, we are always striving to improve our service to you.  Therefore, we welcome your feedback.  Maybe you would like more on-site training.  Perhaps you have ideas for our website or need a specific leave-behind for your clients.  Let us know.  We want to hear any ideas you have that would improve your 504 experience with us.  You can respond to your loan officer directly or contact us any time at 877-BEST 504.

 

 

Together, let’s make the most of the 504 Loan Program and use it to foster growth in 2014.  Lenders, we look forward to partnering with you this year!