Amid the media storm surrounding ongoing government changes, we wanted to focus on the strength of SBA 504 lending. Overall, 504 loans are a great example of a public-private partnership…banks see a mitigation of risk and a host of other benefits, while growing businesses gain access to long-term, quality capital. Plus, the program continues to see solid performance and low defaut rates. When times are uncertain, think 504 for all owner-occupied commercial real estate and long-term equipment financing.
High Performance, Low Default Rates
- SBA approved $6.6 billion in 504 loans in FY2024, resulting in a total capital investment of $16.5 billion
- So far, FY2025 lending volume is up 13.5%, with approval dollars up 18%
- The SBA 504 Loan Program operates at zero cost to taxpayers
- The one-year default rate is 0.31%
- The 10-year charge off rate is 0.5%
A Powerful Tool for Lenders to Attract & Retain Clients
- Meets the diverse financial needs of growing businesses
- Helps create and sustain long-term relationships with clients
- Strengthens deposits and fee income
- Opens up middle-market lending opportunities as more mid-size businesses are now eligible for 504 loans
- Allows for long-term refinancing, with a cash out option…a great tool for borrowers facing balloon payments or for those looking to consolidate their commercial loans
A Beneficial Public-Private Partnership
- The shared structure of the 504 means less risk for lending institutions and lower down payments for borrowers
- Growth Corp is a highly rated, mission-based lender with in-house processing, packaging, closing, and loan servicing. This means lending partners get support throughout the process with no extensive learning curves or special departments needed.
- Growth Corp is an Accredited Lender with SBA – this is only earned by Certified Development Companies who pass SBA’s rigorous review standards
- The bank sets the rates and fees for its portion of the financing
- Helps banks manage lending limits and industry exposure
- The 504 is an economic development tool, creating and retaining jobs for local communities
A Quality Source of Capital for Growing Businesses
- Low down payments – usually just 10%
- Low, fixed interest rates – currently below PRIME
- Long loan terms of up to 25 years
- The ability to include funiture, fixtures, fees, and leasehold improvements with the 504 financing package
- Payment stability and protection from balloon payments
The strength of SBA 504 continues to shine through performance data, so you can trust the integrity of this long-standing program. And remember, Growth Corp is always here to provide ongoing SBA 504 loan support and training. So, whether you want to schedule a time to go over a potential project, estimate a payment, or set up training for your lending team, we’re here to help you reach your goals. Reach out to any member of our lending team today!