On the opposite end of the loan-size spectrum is the 504 Certified Development Company (CDC) Program. Fixed-rate loans for long-term fixed assets, usually real estate and equipment, 504s are used most often for growth and expansion. A CDC is a nonprofit intermediary that works with the SBA, banks and businesses looking for financing. There are CDCs throughout the country, each covering an assigned region. If you're seeking funds to buy or renovate a building or put in some major equipment, consider bringing your business plan and financial statements to a CDC. Typical percentages for this type of package are 50 percent financed by the bank, 40 percent by the CDC and 10 percent by the business.
In exchange for this below-market, fixed-rate financing, the SBA expects the small business to create or retain jobs or to meet certain public policy goals. Businesses that meet these policy goals are those whose expansion will contribute to a business district revitalization, such as an Enterprise Zone; a minority-owned business; an export or manufacturing company; or a company whose expansion will contribute to rural development. Additional public policy goals are the promotion of enhanced economic competition, including the advancement of technology, which covers plant retooling or modernization, and even conversion to robotics. Other categories of companies that qualify are those that compete with imports and those affected by cutbacks in defense spending or by military base closures.
"With any start-up, lenders are looking for an experienced principal to run the company," says Jacklyn Jordan, president of the California Bay Area CDC Capital Access Group. "They want experience in that industry or closely related experience that would apply to running that type of business."