A small business brick and mortar storefront

In the world of commercial lending, there are various products available. When it comes to small businesses, few loans offer as much potential as SBA 504 1st Mortgage Loans. For credit unions that facilitate 504s, the benefits are also many, including an expanded product offering, reduced exposure due to the 504’s low LTV, and greater support of their local community.

That said, it takes a seasoned, lock-step partner like AVANA CUSO to truly reap the benefits.  

SBA 504s at a Glance

The SBA 504 1st Mortgage Loan can help small business owners renovate, build and/or purchase commercial real estate. The important distinction from other CRE loans is that the real estate must be owner-occupied.

These loans provide small business owners with a unique opportunity to own their building, devoid of landlords, rent increases and the risk of being displaced.  

To facilitate these loans, they’re done in partnership between a 1st Mortgage Lender and a Certified Development Company (CDC). Like a credit union, a CDC is also a non-profit focused on community growth.  

With a 504, typical terms include a 50% loan from a bank or credit union, no more than 40% from a CDC, and borrowers are responsible for the remaining 10% as their down payment.  The reduced down payment and long-term fixed rate on the 2nd mortgage mean small businesses can preserve working capital for business growth, job creation and more.

AVANA CUSO’s Head of Credit Matthew Hunt elaborates on this partnership, “It gives a credit union the ability to offer [members] a high-leverage product, but the credit union itself only has to provide the low-leverage loan. So, it’s at a lower risk [50% LTV] to themselves.

That’s a win-win for business owners and credit unions.

Advantages of Partnering with AVANA CUSO

Matthew Hunt and our Vice President of Originations Matt Wilk spearhead AVANA CUSO’s SBA 504 offerings. Collectively, they have 50+ years of experience, giving our credit union partners a wealth of support and expertise.

That’s particularly important because SBA 504s can be complicated given they’re part of a government-backed loan program. As such, they come with a little extra red tape. With AVANA CUSO, it becomes easy to manage program nuances. Our entire team of experts collaborates with credit union and CDC partners to ensure all 504 loans are originated and serviced accurately and efficiently. This is simply not possible with other lenders, significantly separating us from them. 

Matt Wilk says, “AVANA CUSO is happy to take on the complexity of this product for the credit union and the borrower.”

“It’s complicated, but it’s the best-kept secret in lending,” elaborates Matthew Hunt.

Another exciting aspect that separates us is our collaboration with our parent company, AVANA Companies. Through this collaboration credit unions don’t have to personally take on the 90% advance rate for those first 45-60 days of a loan. Instead, AVANA can provide the required interim loan until it gets paid off by the SBA’s funding. This further minimizes the complication and risk credit unions may associate with 504s.

“There are very few shops that have the ability to do [this],” says Bryan Doxford, AVANA’s Chief Strategy Officer. “So, the AVANA and AVANA CUSO partnership seamlessly works in tandem to make the loan happen, which is wonderful. When you think about the experience for the end user [the borrower], it’s brilliant.”

504s Uplift Business Owners & the Broader Community

The SBA 504 1st Mortgage Loan has so much to offer all parties involved, but it’s the borrower and their community that see the most impact. Every 504 transaction has a focus on local job creation and/or retention. 

Bryan explains, “Most businesses cannot control occupancy costs because they’re beholden to a landlord. Allowing them to own their property addresses this risk. The property is an asset a business owns and can write off as a depreciable asset, but in truth, the asset should appreciate over time. The appreciation can add value to the company, and I’ve even seen it serve as a source of retirement income for the business owner should they opt to become a landlord or even sell the property later in life.”

So, the loan allows a piece of commercial property to build equity, just like a home would. That helps build long-term wealth, while also keeping the business’s operating costs down. The upside is incredibly promising. And when small businesses experience firsthand all the benefits of a 504, it becomes a no-brainer lending solution. 

As Matthew Hunt puts it, “The most common thing I hear [from borrowers] is, ‘I wish I did this sooner.’”



Established in 1998 and headquartered in Simi Valley, CA, AVANA CUSO is one of the most seasoned credit union service organizations (CUSO) focused on commercial real estate lending. For decades, we have partnered with credit unions across the country to offer competitive and collaborative CRE loans, including SBA 504 loans. We also uniquely support and guide our partners through the entire lifecycle of our loans. AVANA CUSO is a proud member of the AVANA Family of Companies.

Contact us today to learn more about becoming an AVANA CUSO partner.