Fountainhead Commercial Capital today announced the creation of the FastTrack 504™ program which enables banks and credit unions to fully outsource SBA 504 loans for owner-occupied real estate. Using the FastTrack program, a financial institution can outsource an SBA 504 loan candidate to Fountainhead, which will underwrite the project, assist with SBA authorization and help close first and second mortgages along with interim financing. Fountainhead will also pay premiums to referring banks, offering an opportunity for non-interest income.
SBA 504 loans provide financing for the purchase of fixed assets, such as real estate, buildings and machinery, at below market rates.
According to Fountainhead CEO Chris Hurn, lenders that don’t currently participate in SBA loan programs no longer have to sit on the sidelines or invest extensive resources starting-up a highly-specialized SBA department.
“Many banks and credit unions scramble to find construction financing, interim loan financing, or otherwise reject a viable SBA 504 loan candidate,” said Hurn. “Our program changes the landscape of SBA 504 lending, making it easier for financial institutions to participate in a meaningful and profitable manner. And this will in turn help more small businesses get funding on favorable terms.”
Hurn says regulatory limitations on commercial construction and high loan-to-value loans, coupled with an anemic secondary market for SBA 504 loans has hit the industry especially hard in the past couple years.
“Lenders, assuming they even offer SBA loans, often spend time underwriting transactions that simply are not saleable in the current secondary market,” said Hurn. “FastTrack removes hassles for lenders while allowing them to compete on deals within their market, outside their market area, outside their loan policy parameters, and beyond their legal lending limits.”
The program will initially be offered in 12 states: Florida, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, West Virginia and Wisconsin. Fountainhead intends to expand nationwide by early summer.
With FastTrack 504™, lenders can easily sign-up and hand-off a prospective borrower without fear of losing the overall banking relationship. The Fountainhead team will take it from there: fully underwriting the transaction; working with a Certified Development Company and the SBA for approvals; closing and funding both the first mortgage portion as well as the interim second mortgage portion (including construction funding); and doing post-closing marketing (with the borrower and originating lender’s permission.) Once the SBA debenture funds-out the Fountainhead interim second mortgage, the company will remit loan premiums up to 8% of the funded first mortgage loan amount to the participating bank or credit union.
Fountainhead Commercial Capital, a nonbank lender specializing in the SBA 504 loan program, was founded by some of the most experienced and awarded SBA 504 lenders around.