Financial institutions are constantly looking for new or better ways to bolster income. Banks have investors that are waiting for results. Not-for-profit credit unions can use the income to provide better returns on investment products for their members and lower or reduce account usage fees. In either case, loans are the primary vehicle for success.
With all the competition in the financial world to provide attractive loans to consumers at the best rates while still meeting profit margins, having a diversified portfolio of loan products is a great way to engage the greatest number of people and bring in the most money. This is where Small Business Administration (SBA) loans can help.
The SBA was created in 1953 to help small business owners and entrepreneurs get their operations started and/or expand their visions. The idea was, by supporting business development across the United States, the communities where these businesses operated could gain economic strength, and everyone could proper. SBA loans are partially government backed, and they provide large credit limits, longer terms, and lower down payments than traditional business loans.
Of course, that’s all very well and good for small businesses and entrepreneurs, but how does it help financial institutions? For one thing, since the loans are partially backed by the government, default rates are much lower. For another, the SBA uses Certified Development Companies (CDCs), that act as an intermediary between borrowers and lenders, and takes care of all of the loan processing paperwork. So, a financial institution that offers SBA loans only needs to pony up the working capital needed, then can basically earn interest without any extra work.
504 Capital Corporation is a not-for-profit Certified Development Company with an Accredited Lenders Program (ALP) designation that specializes in SBA loans. We can help build your financial institution’s loan income by connecting you with small business owners and entrepreneurs looking for loans. We can also take care of all the other details of the loan process for you, so you won’t need to staff up or train existing employees on new loan products. Contact us and let’s talk.