How to Choose the Best Bank in California for Your Small Business

Applying for an SBA 504 loan is a joyous occasion: you’re taking a big step toward bringing your business to a new level of success! TMC Financing works with all kinds of lenders and their experts are highly knowledgeable about the California banking landscape. They can help guide you to a conventional lender that is right for you and your business.

What Role Do Banks Play In 504 Loans?

A 504 loan is a partnership between your Certified Development Company (CDC), a conventional lender and you, the borrower. Each of these parties makes a contribution to the loan, with the traditional lender providing 50% or more of the total. The SBA pitches in 40%, up to $5 million ($5.5 million for manufacturing projects or if the project includes energy-efficiency measures), at a below-market rate. That leaves just 10% down payment to be supplied by you, the borrower.

Here is a pie chart depicting contribution percentages:

  • 50% Conventional lender (1st loan)
  • 40% SBA (2nd loan)
  • 10% Borrower down payment

What Are Your Borrower Preferences?

There are a number of criteria for matching a borrower to a lender. Banks, like people, can have certain specialties. The industry you are in, the type of building you are buying, and your location all play a role in the selection of a lender. For example, startups and hotel projects require a 15% down payment. However, at the top of the list is the borrower’s preferences.

You may value a personalized approach to banking, with a high level of customer service and lots of individual attention. In this case, a smaller community bank might be ideal for you. Credit unions and savings and loan associations can also be your partner in a 504 loan.

If you are looking for the best terms and rates, a larger bank might meet your needs more closely. There are many mid-sized and large banks to choose from, so you will have a variety of offers to consider. The differences between those offers is likely to be rather technical, so sorting them out is one of the ways that TMC can help you.

Navigating through the process of trying to find a lender to provide your first mortgage can be time consuming and frustrating.  By coming to TMC first, we can handle this component for you, allowing you to focus on your business. After learning your project details and personal preferences, we can introduce you to the best bank accordingly.

Who Would You Work Best With?

Partnership is a two-way street. There are banks out there looking for clients with your profile. Banks look at a number of factors, including:

  • Your credit history and your business’s credit history
  • How long the business has been active
  • The business’s cashflow, particularly whether your calculations are based on actual cashflow or projected cashflow
  • The type of collateral you can provide

Banks want to do business and finding the right match for you is a delicate process, but not necessarily a hard one. As has been seen with many great partnerships, a good matchmaker is often the secret to success. TMC Financing’s loan experts can help you “shop the deal” to several different lenders, ensuring we find the best match to suit your needs.

Guidance from skilled professionals is crucial throughout the SBA 504 loan process. TMC Financing has been helping business owners get the funding they need for 35 years. The loan experts at TMC know the lenders and the lending market in California, and they can advocate for you as you find the lender that is right for you. Contact a TMC loan expert to begin finding your lender today.

Barbara Morrison

Barbara Morrison

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison