The ASBC 504 Velocity Bridge Loan Program minimizes or eliminates risks for banks and third-party lenders who finance first lien loans (typically for 50% of project costs) for SBA 504 Loan Program participants. The program provides these lenders with bridge loan funds to cover the “debenture funding”– the second lien loan (typically 30% – 40% of the cost, financed by ASBC), prior to the permanent takeout of the SBA second mortgage.
ASBC 504 Velocity Bridge Loan Program
Removing Lender Risk from SBA 504 Loans
Who's it for?
- Third-Party Lenders for SBA 504 Loan Program Participants
- Ideal for construction loans. ASBC can provide complete interim financing up to 90%, which eliminates all construction risk for our lending partners.
- Provides certainty
- Minimizes or eliminates risk associated with SBA 504 Loans
- Speeds funding and project completion
- Lowest bridge loan cost in the market
- Ensures maximum efficiency of bridge loan approval, closing, construction administration, and funding of the debenture loan
- Avoids governmental agency delays that can extend timing, increase costs or affect funding
- Not dependent upon funds being available at the time the loan is needed
- Not pari-passu with bank partners (unlike other programs). Takes a fully sub-ordinate lien position behind our partners
Last week, the ASBC 504 Velocity Loan Program made another small business deal happen – this time, in our Georgia market. The borrower, a rising advertising and production company based in Atlanta, utilized the program to finance a mixed-use office building. The project was originally approved back in March by the lending partner, but due to Covid-19 related stresses, the bank was unable to facilitate the funding on time.
This is where Velocity stepped in!
The program was able to facilitate full 90% financing that included renovations. The original lender remained committed to the permanent financing upon the debenture funding. In this scenario, the bank maintained their client relationship all while incurring ZERO RISK from the time of the closing through the debenture funding.
We are all navigating this new lending environment together. When times call for thinking outside the box, ASBC has the tools and expertise to keep deals on track and ultimately, reach the closing table. We stand ready to provide solutions to keep the small business community moving forward!
The General Manager of the Club at Cheval (semi-private golf course located in Tampa, FL), decided he wanted to purchase the course from the owner. After exploring purchase options with his banker at First Citrus Bank, the 504 Program proved to be the best fit with its low down payment and long-term fixed rate.
His 504 Loan application was approved with ASBC and First Citrus Bank just as the COVID pandemic struck – flooding the credit market with uncertainty. Knowing both the bank and borrower may be weary about moving forward with the purchase, the ASBC Business Development Officer informed them of the ASBC 504 Velocity Bridge Loan Program, which provides gap-financing prior to the SBA loan funding. Why was gap-financing the right decision for this loan?
- Gap-financing mitigates all credit risk as it pertains to the SBA funding.
- Our Velocity Program is not subject to state approvals or administration, creating an expedited process like no other.
This particular Velocity Loan was:
- APPROVED in less than a week
- CLOSED within three weeks (along with Third Party Loan)
- FUNDED sba debenture approx. 60 days after closing
By utilizing the ASBC 504 Velocity Bridge Loan Program, the borrower was able to eliminate risk and uncertainty, experience an expedited funding process and obtain a 2.59% 25-year fixed rate. Finally, due to the CARES Act, the borrower is not required to make a payment on their SBA loan for the next six months.