All the Savvy Bankers

All the single ladies, all the single ladies
All the single ladies, all the single ladies
All the single ladies, all the single ladies
All the single ladies, Now put your hands up

Up in the club, we just broke up, I'm doing my own little thing
Decided to dip and now you wanna trip
'Cause another brother noticed me*

Beyonce is awesome and unbelievably talented, but what most people don’t know is that before she was a pop star, she was interested in commercial lending.  Most people also don’t know that the above lyrics  were not the original words to the hit smash “All the Single Ladies.”  It was originally written as an ode to the SBA’s 504 lending program and went a little something like this…

All the savvy bankers, all the savvy bankers
All the savvy bankers, all the savvy bankers
All the savvy bankers, all the savvy bankers
All the savvy bankers, Now put your hands up

You’re up in your office, we just hung up, I'm doing my own little thing
Decided to borrow and now you feel sorrow
'Cause another banker noticed me

The song’s lyrics were changed because the record company did not think it would be a smash hit.  Can you believe they called it a “niche song?”  Well, Mr. Record Company Executive, I would have bought a copy.

So what did Beyonce know that you might not know?  Well, here are some of the benefits for banks using the 504 program (They are numerous, but I will only hit the highlights).

• Mitigation of credit risk-  Lenders have first-lien position and typically a 50% loan-to-value ratio, minimizing collateral risk.
  
  
• Manage overall lending limits and industry exposure-  Smaller banks can entertain larger projects and larger banks can limit their exposure to certain industries.
  
  
• Assist more customers-  Leverage lending capacity across more borrowers and diversifie default risks.
  
  
• Gain new customers-  504 loans are designed to finance growth companies and are often the basis for entire banking relationships.
  
  
• Active secondary markets-  There is an active market for 504 first mortgage loans.
  
  
• Strengthening core earnings-  90% financing means that more of the customer’s funds remain on deposit.
  
  
• CRA Credit- Banks using the 504 are eligible for Community Reinvestment Act (CRA) credit.
  
  

As you can see, there are a number of selling points to the 504.  It is not hard to understand why Beyonce would be so excited about the program.

* Single Ladies" was released on 9/10/2008. It is track #1 on the album I Am... Sasha Fierce. Written by Christopher Stewart;Jr. Harrell;Terius Nash;Beyonce Giselle Knowles: Performed by Beyonce Giselle Knowles;  Also, please know that I made up all the stuff about Beyonce being interested in commercial lending.  I just made it up to get your attention because though the SBA 504 loan is a wonderful option for lenders to use, it is not exactly the most interesting topic for a column.  So I took a little creative license… ok a lot of creative license… ok I lied…