SBA 504 Loan

If buying your own building is desirable, one of the SBA’s flagship programs called the SBA 504 loan can help you achieve your goal.  CDC Small Business Finance is the nation’s leading provider of SBA 504 loans.  Our loans are designed to help small businesses buy, construct or improve commercial and industrial buildings as well as buy and install heavy machinery and equipment.

Advantages of a SBA 504 loan

  • Long-term, fixed rate.  504 loans have a 20-year fixed rate term on real estate and a 10-year fixed rate term for equipment
  • Below-market interest rates
  • Low down payment retains capital in the business.  Conventional bank loans require a 20% down payment.   The SBA-504 Loan has a down payment minimum of 10% – allowing your business to retain the additional 10% for working capital. (Down payment is 15% for start up businesses).
  • No balloon payments
  • The 504 loan is government guaranteed.  Therefore, the collateral required is normally the property being purchased ;no additional collateral needed.
  • Closing costs such as appraisal fee, environmental fees, contingency fees can be included in the financing
  • Projected income consideration – CDC can consider projected income of a business in addition to historical cash flows. This is particularly advantageous for growing businesses.

Structure Of LoanSBA 504 pie chart

A SBA 504 loan has three participants:

  • Bank – provides a first trust deed loan for at least 50% of the total project cost.
  • CDC – provides SBA-guaranteed 504 loan for up to 40% of the total project cost, or a maximum of $5 million ($5.5 million for manufacturing businesses and “green” buildings).
  • Small Business Owner – contributes a down payment of at least 10% (15% for start-up businesses or single purpose properties)

To qualify, the business must:

  • Be organized for-profit
  • Be organized as a sole proprietorship, corporation, partnership or limited-liability corporation (LLC)
  • Have tangible net worth no greater than $15 million and average net profit after taxes below $5 million in the last two operating years


  • 51% owner occupancy for existing building
  • 60% owner occupancy for new construction
  • Equipment must have a minimum 10-year economic life

Interested in applying?

Visit our online application here or call 800-611-5170 to speak to a loan expert today.