Certified Development Company (504) Loan Program

General Loan Program Requirements
To be eligible, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

Loan Program Description
The CDC/504 loan program is a long-term financing tool for economic development within a community. The 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. Generally, A private investor will provide 50% of the project cost, the Certified Development Company (backed by SBA) will provide 40% of the cost, and the business applicant will provide 10% equity injection. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

Loan Terms
The interest rate is pegged to an increment above five and 10 year Treasury Issues. The length of the loan can be either 10 or 20 years. The maximum loan amount is general $1million, but can be $1.3 million for public policy goals.

Loan Application Process
Businesses interested in applying for this loan should contact their local Certified Development Company (CDC). A Certified Development Company is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses. There are about 270 CDCs nationwide. Each CDC covers a specific geographic area.

Loan Program Contact Information
For more information on this program, contact SBA.

Loan Managing Agency
U.S. Small Business Administration