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10 Tools to Increase 504 Business Opportunities

Posted By Ken Rosenthal, Monday, December 16, 2013
Hey Gang:

I wanted to share with you some of my best tools for increasing SBA 504 business opportunities. Over the last 23 years I have tried many different methods to acquire business in the most competitive environment in the country. In fact, when I started in this business, I competed against 5 other loan officers in my own company for business in one county alone. I had to think outside the box and come up with different methods to win business rather than just do the same thing as the other loan officers were already doing at my company. Now, fast forward many years, and we not only have inter-company loan officer competition, but severe CDC competition, as well as intense Bank conventional competition, and intense 7(a) competition. Those are some serious reasons to think very long and hard about getting out in the forefront and being progressive rather than being reactive. I have learned that in our business, if you are reactive, you will do very little volume. Success comes to those that are progressive and go after it! That being said, I want to share my "top 10" list of business development ideas. Feel free to goes…the order may be different for different people in different CDC’s…but the theme is consistent.
  1. Prioritize your Lender partner referral sources - those you are currently doing business with and those you are not. Create categories of A, B, C by volume. Spend the majority of your marketing effort with YOUR A sources.

  2. Prioritize Lender partner referral sources of your competition - those they are doing business with and those they are not. Create categories of A, B, C by volume. Do not bother to go after THEIR A sources. Go after their C sources - that is the low hanging fruit.

  3. Identify new opportunities for Third Party Lenders. Are you going after Non-Bank Lenders? How about Credit Unions? How about those banks that do not currently do 504 lending? Educate them and give them tools to win deals or allow them refer business to you and you find ways of helping their clients while maintaining their banking relationships.

  4. Education and Knowledge are your most powerful tools. In this business a great sales person alone will not be successful. You MUST have the combination of sales AND the knowledge. Market yourself to your referral sources as THE 504 EXPERT. You will gain business by being the expert if your referral sources think of you as the GO TO person for SBA lending.

  5. Market yourself as the ONE STOP SHOP FOR MONEY. When I started 23 years ago and competed against 5 other loan officers in my own company I marketed to banks NOT doing SBA lending. I offered my services to help their clients gain access to capital. I used non-bank lenders to fund their 7(a) loans and the secondary market to fund their 504 firsts. Think of it this way, a 7(a) today could be a 504 tomorrow. Your referral sources should be coming to you for all small business lending advice. If you have the capability of offering the right financing tool within your CDC great…if not, refer the transaction to a non-bank lender who can do the deal and your referral source keeps the relationship.

  6. Use the 504 Secondary Market for the first mortgage as a marketing tool. Let your lending partners know about this tool to win deals that may not fit in their bank’s box – it may be for reasons such as pricing, credit box, capacity to one customer, out of market deals, or legal lending limits. Why not let them keep the borrower in house and all the relationship lending and use the secondary market lender for the specific transaction. Guess what, if the deal gets done with the secondary market lender as the first mortgage lender who gets the CDC piece – you do!

  7. The best tool to beat fixed rate 7(a) competition: How do you beat a 25 year fixed rate 7(a)? The answer is with a 25 year fixed rate 504 first mortgage coupled with a 20 year fixed rate second mortgage! See number six above!

  8. Outside of the obvious referral source of our third party lenders – the number 1 referral source is commercial real estate brokers. Nearly every transaction has a selling and a listing broker. You need to market to them to offer your knowledge and expertise with all the above tools previously mentioned. Most business owners will go look for property using a commercial real estate broker before they go to their bank to get qualified for a loan. Using this approach, you will get in early! You can even partner up with lenders or you can market to them directly. Use number 4 above.

  9. How do you reach these commercial real estate brokers? The answer is so simple. Every transaction you currently are working on has a listing broker and a selling broker listed on the purchase contract and escrow instructions. Contact them now, let them know you are involved in helping their client obtain financing so they can close their escrow. Get them involved by asking them for some information so they need to interact with you. Keep them in the loop. Then once the deal is approved….ask to see if they have any other prospects you can help with…Sales 101: Ask for the order!

  10. How do you beat CDC competition: The answer is efficient marketing strategies. Too many CDC’s go after the same bankers as their top marketing strategy. I suggest applying the tools above systematically. If you do so in a professional and efficient manner – I guaranty it will be effective. Create a marketing plan. Stick to it. Evaluate it every quarter and make adjustments as needed.

Tags:  Top 10 

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Aaron Shanks says...
Posted Thursday, May 08, 2014
Thanks for this Ken & NADCO. This gives us much to think about.
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