SBA 504 CDC Debenture Loan Overview
- Lower down payment, fixed rate, longer amortization.
- Any for-profit small business (net worth under $6million, profit after tax ($2million).
- Purchasing buildings and land; construction, expansion, or conversion costs; leasehold improvements; purchase of machinery and equipment; and certain soft costs. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.
- $1,500,000 when meeting the job creation*
- $2.0 million when meeting a public policy goal.**
- The maximum debenture for "Small Manufacturers" is $4.0 million.
- Interest rates on 504 loans are fixed to an increment above the current market rate for five-year and 10-year U.S. Treasury issues.
- Ten years for equipment and 20 years for real estate.
- Owners must provide a minimum of 10% equity in the project based on the proposed loan amount, with the remaining 90% through banks and the CDC. Start-ups can be required to provide 15%-20%.
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Eligible Applicants
Eligible loan purposes:
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*Generally, a business must create or retain one job for every $50,000 provided by the SBA except for "Small Manufacturers" which have a $100,000 job creation or retention goal
**(Business district revitalization, expansion of exports, expansion of minority business development, rural development, increasing productivity and competitiveness, restructuring because of federally mandated standards or policies, changes necessitated by federal budget cutbacks, expansion of small business concerns owned and controlled by veterans (especially service-disabled veterans), and expansion of small business concerns owned and controlled by women.)