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LENDERS & CREDIT UNIONS 504 LOAN PROGRAM

Traditional Lending Isn’t for Every Business – We Can Help You Make Loans to Your Business Clients

Our SBA 504 loan program provides a great alternative to traditional lending for your small business clients. It helps you manage the risk of taking on a borrower all by yourself, while also providing long-term interest and fee income.

By working with NEDCO, a nonprofit SBA CDC (Certified Development Company), you can provide up to 90% financing for fixed assets such as commercial real estate and heavy duty equipment to small business customers you believe are a good risk.

Benefits for You

There are a number of them available:

  • You expand your business loan portfolio
  • You take on a first lien position with 50% LTV
  • You make your own decisions using your own documentation
  • You set the fees and rates
  • You earn fees and interest income on loans related to the project
  • NEDCO staff can work directly with your client, so you focus on taking in the profit
  • Your lending limits and industry exposure are managed more effectively
  • You can sell the first mortgage on the secondary market to increase your fee income and to keep your liquidity
  • Many 504 loans are closed within 60 days, and some in just a few weeks

What is the Structure of the Loan?

  • You take on 50% of the loan and a first mortgage position. The minimum term for the loan is 10 years for real estate and 7 for heavy duty equipment.
  • NEDCO takes on 40% of the loan’s financing up to a $5 million cap and a second mortgage position. Terms last up to 20 years for real estate and equipment.
  • Payments are kept level so your clients have a predictable repayment schedule, making it more likely they’ll repay the loan
  • The borrower takes on just 10% equity (more in some cases), which allows them to grow their business and make profit. In turn this makes it easier for them to repay you.
  • There is no limit on overall project size, but there is a limit on the amount of funding offered.

To learn more about 504 loans or to become our partner, contact us.