Commercial lenders often ask: What does the typical 504 borrower look like – and how strong are these credits?
As of the start of 2026, WBD managed a robust and high-performing 504 portfolio of 1,757 loans totaling $1.09 billion. Despite the fact that many 504 borrowers represent leveraged, growth-oriented businesses that may not align neatly with a bank’s conventional credit parameters, the 504 loan program continues to produce exceptionally solid credit outcomes.
Below is a summary of the updated borrower credit characteristics based on WBD’s internal credit scoring at the time of approval. The data represents an average among all borrowers in WBD’s portfolio on Dec. 31, 2025.
Borrower Credit Profile at Approval
- Collateral Coverage: 0.62x
- Debt to Worth Ratio: 10.0x (excludes ~17% with deficit net worth)
- Historical Debt Service Coverage Ratio: 1.11x (49% had debt service coverage less than 1.0x)
- Management Experience: 3.7 years of on-site experience
- Personal Credit Score: 782
- Current Ratio: 2.6x
What This Tells Us About 504 Borrowers
The typical 504 borrower is a growing business – highly leveraged (under-capitalized), often projection-based, and frequently facing a collateral shortfall. These are exactly the types of situations where conventional underwriting becomes challenging, and where the 504 loan program provides lenders a powerful structural advantage.
Why These Loans Perform: The Power of 504 Structure
- Lower down payment preserves liquidity
- Long-term fixed rates reduce interest rate risk
- Lower monthly payments enhance cash flow
- Senior lien position strengthens lender protection
- CRA credit qualification adds regulatory value
WBD Portfolio Performance (as of 12/31/2025)
- Total Balance: $1,087,621,766
- Number of Loans: 1,757
- Non-Current Loans (<30 days): 1 loan totaling $258,000
- 45-Day Delinquent Loans: 0
- 65-Day Delinquent Loans: 0
- Loans Repurchased in 2025 (>90 days): 5 loans totaling $2.6 million
- Loans in Deferral: 2 loans totaling $4.6 million
Why This Matters for Lenders
If you are reviewing a fixed asset-related transaction that is highly leveraged, light on collateral, driven by growth, or outside your conventional credit policy, a 504 loan structure may turn a decline into a strong, bankable opportunity. WBD prioritizes business owners with relevant experience, a respectable personal credit score, and adequate working capital. WBD’s internal credit scoring system has served us well since its implementation in 2004 with more than 4,000 loans processed using this system. These are good loans.
We genuinely thank you and appreciate your partnership which enables WBD to support the growth of small businesses across Wisconsin and Minnesota.
