The Second Coming of the 504 Secondary Market

“Once upon a seemingly long time ago, in a lending market far, far away; lenders could sell the first lien position loans resulting from 504 projects...”

The stimulus package included provisions to encourage the securitization of 504 first lien position loans. SBA’s guidelines defining such actually came out in November of 2009, and it is expected that shortly that some potential players in the market may be attempting to begin securitization under these guidelines.

Please see a current NAGGL "InFocus" article addressing this issue:

Access to the secondary markets, can be a major issue for lenders attempting to utilize the 504 program. Whether from a desire to manage capital, liquidity or the credit exposures of the portfolio; the possibility of a renaissance of the secondary market is a development, of which, lenders need to be aware. Hopefully, your CDC is keeping you up to date on these matters, if not, perhaps you would like to update your CDC relationship?

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