SBA 504 Loan
Rates starting at 5.25%*
An SBA 504 loan is a specialized economic development financing program designed to help growing businesses acquire major fixed assets — such as commercial real estate, land, or heavy machinery — while preserving essential working capital. Backed by the Small Business Administration through nonprofit Certified Development Companies (CDCs), the program uses a unique multi-party funding structure to offer business owners below-market interest rates and long repayment terms.
Key Points:
• The 50-40-10 Financing Structure: The loan is uniquely split among three parties: a traditional commercial lender provides 50% of the project cost (secured by a first lien), a Certified Development Company (CDC) provides 40% backed by an SBA debenture, and the borrower contributes a low 10% down payment.
• Fixed Interest Rates and Long Terms: The CDC portion of the loan offers below-market, fixed interest rates for long maturities—typically 25 years for commercial real estate and 10 or 20 years for heavy machinery and equipment—which helps stabilize long-term occupancy or operational costs.
• Strict Fixed-Asset and Owner-Occupancy Rules: Proceeds must be used exclusively for major fixed assets (like purchasing buildings, constructing facilities, or buying heavy equipment) rather than working capital, and if used for real estate, the operating business must owner-occupy at least 51% of an existing building (or 60% if it’s new construction).