On the Horizon: John Rost, Sycamore National Bank

In this new feature, Andrew Young, vice president of Horizon Certified Development Co., will spotlight a banker who has had success making U.S. Small Business Administration 504 loans. He begins with John Rost, senior vice president of Sycamore National Bank.

Rost started in banking in 1982 as a management trainee and later became a corporate credit analyst and commercial lender for Mellon Bank in Pittsburgh. In 1988 he came to Cincinnati to join Ameritrust. After stints at Bank One and PNC, in 1996 he moved to Sycamore National Bank, where he is the senior lender. Rost was named HCDC Lender of the Year in 2002 and was elected a member of the HCDC Project Review Committee in 2003.


Young: What are the types of clients who make a good fit for a 504 loan?

Rost: Clients or prospects that are leasing their facility and have the capacity to borrow to replace or expand their existing space. The ideal customer is one that wants to own its own building and may pay less in mortgage payments than what is currently being paid in rent. The 504 program is also a good match for clients with other capital needs because it requires a lower down payment compared to traditional financing. The client can put cash saved to other uses for a potentially higher return on investment.

Young: What are some misconceptions of the 504 program?

Rost: Some bankers have a misconception of the SBA in general, which is fueled by the SBA 7(a) loan process. Many lenders don't understand the SBA 7(a) program and therefore stay away from all SBA products. The SBA 504 program is different because HCDC handles the SBA application, so the lender doesn't have to interact directly with the SBA.

Young: How does the 504 program work in a smaller financial institution?

Rost: The SBA 504 program allows smaller banks like Sycamore National Bank to leverage their resources to serve more customers. It frees up capital and allows them to participate in much larger projects than they normally would be able to do. The board also likes that the 504 projects are well-secured, with the bank in a 50% first mortgage position.