Definition: An SBA loan program that provides long-term, fixed-rate loans of up
to $1 million for financing fixed assets, such as land and
buildings
CDC-504 loans are one of several loan programs offered by the
SBA, which provides loan guarantees to entrepreneurs, promising the
bank to pay back a certain percentage of your loan if you're unable
to. CDC-504 loans are made through nonprofit Certified Development
Companies. The program is designed to enable small businesses to
create and retain jobs. If you're seeking funds of up to $1 million
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 seeking this type of loan to create or
retain jobs or to meet certain public policy goals. Businesses that
meet these public policy goals are those whose expansion will
contribute to a business district revitalization, such as an
empowerment zone; a minority-owned business; an export or
manufacturing company; or a company whose expansion will contribute
to rural development.