In California, there is a new lending source for 504 loans created to increase access to capital for small businesses by utilizing a relatively unknown immigration program managed by U.S. Citizenship & Immigration Services. In short, the program is called EB5 and the lender uses this program to fund the 1st TD on 504 projects. USEDLC Wholesale Lending started using this program several months ago, but officially introduced themselves to the market around 45 days ago. To date they have financed approximately $22.5 million in 1st TD transactions, which includes a recently closed $6 million 1st TD transaction to finance the acquisition of a multi-use office/warehouse.
“This was a 504 transaction that had SBA approval, but no traditional lenders would approve the loan,” said David Manser, Director of Commercial Lending for USEDLC, “Because it met the two criteria for our loan program (operated within an acceptable NAICS code and was located within a Targeted Employment Area), we were able to get past the uniqueness of the collateral and business model of the applicant and approve the loan. The bottom line is we were able to fund the transaction when all other traditional lenders took a pass.”
EB5 companies provide foreign investment funds for small business transactions in exchange for consideration of an accelerated citizenship application process for the foreign investor. Manser says that the USEDLC team has figured out a way to operate in this niche without complicating the 504 funding process.
“That is the beauty of our program,” Manser said, “We aren’t competing with mainstream lenders because our parameters require us to lend in some less desirable industries (manufacturing, car washes, etc.) in areas of relatively high unemployment. We are filling a gap for small business that is currently not being met.”
Read More on USEDLC and this program Here.