The credit union

Once upon a time, in a land shaped by challenge, competition, and opportunity, there was a thriving credit union dedicated to serving its members—including a growing number of small business owners. One day, a longtime member approached the credit union seeking help refinancing a $7 million commercial real estate loan held by a local bank. The loan carried a high interest rate and a looming balloon payment. That same day, another member requested a $3 million loan to purchase a commercial warehouse to support his expanding inventory needs.

The credit union wanted—and needed—to grow its loan portfolio and support these members. However, without deep experience in commercial real estate lending, its leadership was uncertain how to structure solutions that met both member needs and internal risk requirements. Unaware of the support available through Certified Development Companies (CDCs) or Credit Union Service Organizations (CUSOs), the credit union faced the risk of losing valuable lending opportunities and long-term member relationships.

The CDC

Unbeknownst to the credit union, on the other side of town operated a Community Development Corporation (CDC). CDCs are SBA-certified, nonprofit organizations that—much like credit unions—are committed to fostering economic growth in their communities. This CDC was authorized by the Small Business Administration to partner with credit unions and banks to deliver SBA 504 loan financing to qualified small businesses.

The SBA 504 loan program provides long-term, fixed-rate financing for commercial real estate and major equipment purchases, helping small businesses grow with stability and confidence. In addition to acquisitions, the program allows refinancing of eligible fixed-asset debt, enabling business owners to replace high-interest, short-term loans with predictable, affordable financing.

Under the SBA 504 structure, the credit union funds the senior portion of the loan in an attractive first-lien position, while the CDC funds a subordinate portion backed by an SBA guarantee. Despite their aligned missions, the credit union and the CDC had never crossed paths—like ships passing in the night.

The CUSO

Also operating in this land of challenge, competition, and opportunity was a CUSO—an experienced, national expert in SBA 504 lending. For years, the CUSO had helped credit unions and small businesses successfully navigate the complexities of SBA financing by coordinating collaboration between credit unions and CDCs.

Seeking guidance, the credit union reached out to the CUSO and quickly discovered that the CUSO had an established working relationship with the CDC. Leveraging decades of experience, the CUSO stepped in to manage the most complex aspects of the process—including structuring, packaging, underwriting, closing coordination, compliance, and ongoing servicing. This allowed the credit union to remain focused on what it does best: serving its members.

Through this collaborative effort, both the $7 million commercial real estate refinance and the $3 million warehouse acquisition were approved under the SBA 504 program. The credit union gained confidence, expanded its SBA lending capabilities, and continued delivering impactful financing solutions to its business members—much to everyone’s benefit.

The moral of the story

The commercial real estate lending landscape is evolving rapidly. With conventional interest rates still elevated and balloon payments coming due, small business owners are increasingly seeking stable, affordable alternatives—and SBA 504 loans are meeting that demand. These government-backed, fixed-rate loans offer longer terms, lower down payments, and competitive rates, enabling businesses to purchase or improve property, acquire equipment, and—in certain cases—refinance existing debt while preserving cash flow.

For credit unions, this shift represents a significant opportunity to grow market share, deepen member relationships, compete more effectively, and reinforce their role as community-focused financial partners.