504-is the smartchoice

SBA 504 is the Smart Choice

We sometimes use the word “SmartChoice” to talk about SBA 504 loans. Maybe you’ve seen it in an email from us, or on our website. Our smartphone app is even called the SmartChoice Commercial Loan Calculator. Well, we’ve come to a decision that calling SBA 504 loans something different is confusing at best and we’re going to use the term SmartChoice a lot less going forward. Here’s some backstory on the matter…

Let’s first go all the way back to the beginning. Mercantile was formed in 2002 as a commercial lender that would do only SBA 504 loans. Positioned somewhere between a conventional commercial lender and a CDC, this new entity would originate and provide interim financing for 504 loans first in Florida and nationwide shortly thereafter. One of the hurdles we had to overcome was the public perception of the Small Business Administration. Many people thought of it as a lender of last resort, and it was much maligned for its slow-as-molasses pace and mountainous paperwork. Though this reputation may have been somewhat deserved, our specialization in this one loan product allowed us to streamline the process and make the SBA’s participation a non-issue for borrowers. Convincing people to give the SBA another look after hearing horror stories from other borrowers was a different matter.

Around 2007, we had the bright idea of simply calling the loan program something else. After all, the 504 moniker doesn’t have any real meaning or significance (that we’re aware of), so why not give it a more descriptive name and remove the SBA stigma at the same time? SmartChoice is what we came up with, because we believe the 504 loan is the “smart choice” (see how clever?) for small business owners who want to buy/build/renovate their commercial facilities. We began using it interchangeably with SBA 504. We wanted everybody to know that a SmartChoice loan is the same as a 504 loan. We also wanted everybody to think it was something different so the SBA part of it wouldn’t scare them off. Theoretically, this was a good idea from a marketing and branding perspective. In practice, however, it muddied the waters a bit.

The SBA is getting more press all the time, especially in the wake of the Great Recession. It played a significant role in the recovery of small businesses when 504 refinancing was temporarily allowed and a first mortgage pooling program was temporarily created. These measures helped get lenders off the sidelines and gave business owners greater access to badly needed capital. While there are still SBA detractors, we think the administration is largely viewed in a positive light these days. Sure, some borrowers may have less than perfect experiences with SBA loans, but conventional commercial loans can sometimes be messy, too.

Because of this — because we no longer see the need to call 504 loans anything other than 504 loans — we’re going to drop the use of SmartChoice Commercial Loan. For the most part. Our smartphone app will still be called the SmartChoice Commercial Loan Calculator, and you may find a SmartChoice reference or two somewhere on our website. But we really don’t want to risk confusing anybody about what we do. We already get enough questions about whether we’re a CDC or whether we actually lend money (no we’re not a CDC, and yes we do actually lend money).

In summary, we do SBA 504 loans and only SBA 504 loans. This is because we believe they’re the best choice — the smart choice — for small business owners who want to buy, build, and/or renovate their commercial facilities. We want you to think of us as the SBA 504 loan experts and we don’t want you to wonder why we’re making up new names for already established loan programs. We apologize if there was past confusion about any of this, and if you have any questions or just want to hear more about who we are and what we do, call or email or leave a comment below. We’re here to help.

– Your 504 Experts

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