Summary
The CDC/504 loan program, part of the federal Small Business Administration, 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. 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, go to www.sba.gov to find one near you.

 

Eligible Applicants
Any for-profit small business with a net worth less than $7.5 million and profit after tax less than $2.5 million.

 

Eligible Uses
Land acquisition, site improvements, acquisition of existing building, building renovation, leasehold improvements, new construction, machinery & equipment with a useful life of at least 10 years, and certain soft costs, such as engineering fees, architectural fees, appraisal fees, and environmental fees.  Loans may not be used for working capital, debt consolidation, refinancing, venture capital, or investment purposes.

 

Loan Amounts
The gross amount of the loan can be up to $1,500,000 for regular loans, $2,000,000 for Public Policy Goal loans, and $4,000,000 for small manufacturers, or 40% of the total eligible project costs, whichever is less.  Additional equity requirements will reduce the SBA participation amount

 

Terms
10 years for machinery & equipment; 20 years for real estate.

 

Interest Rate
Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and 10-year U.S. treasury issues. Maturities of 10 and 20 years are available. Fees total approximately three (3) percent of the debenture and may be financed with the loan.

 

 

Job Criteria
One job to be created or in some cases retained for every $50,000 of net SBA 504 funds in the project within two years of disbursement.  If the project involves a small manufacturer, the criteria is one job for every $100,000.