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CDC-504 Loan

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.

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