With the volatility in the financial markets, we received a call from one of our bankers indicating that bank auditors were questioning the marketability of the 504 bonds and hence an increased risk of the bank being paid down.
The 504 bond sale will occur every month, and will be fully sold every month.
1. The Sale Process: Many of you attended a presentation by our Bond Trader nearly two years ago where he described the 504 bond sale process. SBA has contracted with Merrill Lynch and Credit Suisse First Boston to sell the 504 bond product during alternate months. The contract requires that those two agents actually purchase the product on the sale date and then they resell to interested buyers. We are thus guaranteed that the entire pool will be sold on the sale date. The pricing structure for any particular sale takes into account market conditions so that the bonds can essentially be sold to end buyers immediately,
and our agents hold very little of our paper in their portfolios (what they hold is by choice, not from necessity).
2. The SBA Guarantee: The market is looking for quality and security. While our product is technically a commercial mortgage backed security, the primary selling feature is the full faith and credit guarantee of the SBA.
The investor is guaranteed a return of both principal and interest. It is a highly predictable investment product.
3. Ready Pool of Buyers: Forecasting large increases in the size of pools being sold, our Bond Trader and agents have increased the number and types of buyers over the last five years.
We are now selling over $400 million monthly and have had a surplus of potential investors for each sale.
If you have any questions or concerns, please do not hesitate to contact Sally Robertson
at srobertson@businessfinancegroup.org or at 800-305-0504.
Business Finance Group Hosts Congressional Staff Project Tour
Senator Snowe, the ranking member of the Senate Small Business Committee, has added new staff to support her on this important committee.
Business Finance Group was asked to meet with the staff and provide a 504 project tour during the recent summer recess.
We were very excited to have the opportunity to meet with Senator Snowe’s staff and to show off several of our borrowers in the Alexandria area. Each showcased a different reason for using the 504 program as well as a great business story. Our thanks to Ernie Clark with Mister Kleen, Willem Polak with Polak Steamboat
and Chris Wolz with Forum One Communications for taking the time to tour their projects and discuss the 504 program!
It is our hope
that the time invested will lead to a better legislative package, and more importantly, passage of much needed legislation!
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