SBA 504

Small Business Administration 504 Loan Program

The SBA 504 Loan program is the Small Business Administration's (SBA) economic development financing program that helps American small businesses grow while benefiting communities through tax base expansion, business growth and job creation. Loans are available for all types of small, for-profit businesses to purchase and/or renovate capital assets including land, buildings, and equipment.

A small business is defined as having net worth under $15 million and net annual profit under $5 million with some exceptions.

Eligible Projects

Fixed-asset acquisition or expansion including:

• Purchase of land and/or construction of new buildings
• Purchase and/or renovation of existing buildings
• Acquisition/installation of machinery
• Construction and/or remodeling of buildings on leased land


• Low down payment - as little as 10%. Allows the small business owner to preserve critical working capital.

• Long term - SBA 504 loans are for 10 to 20 years. Because the CDC is in a second lien position, the bank or other lender providing the 50% first lien loan is willing to lend for a longer term.

• Fixed, low interest rate - The mortgage payment amount is fixed for 10 or 20 years. No worries about the prime lending rate going up. Even with fees and closing costs included in the rate, it is still a low rate for a subordinate mortgage loan, particularly for a small business.

Lending Parameters

• $50,000 minimum loan amount

• No maximum project size; $5 million maximum loan amount

• If business is a manufacturer or energy-related project, $5.5 million maximum loan amount

Typical 504 Loan Structure

Entity Loan Amount % of Project Security
Lender $500,000 50% 1st Deed of Trust
CDC/SBA $400,000+ fees 40% 2nd Deed of Trust
Borrower $100,000 10%  
Total $1,000,000 100%  

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Click Here to Download Loan Application Checklist

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