SBA 504/CDC Loan Program
Small Business Administration
Up to $5,500,000
Long-term fixed-rate loans for real estate and equipment
Long-term, fixed-rate financing for major fixed assets — real estate and heavy equipment. Structured as a three-party deal: a conventional bank funds 50% of the project, an SBA-certified Certified Development Company (CDC, a nonprofit) funds up to 40% backed by an SBA debenture, and the business puts in as little as 10% down. The result is below-market fixed rates for 10, 20, or 25 years on owner-occupied commercial property and equipment with a 10+ year useful life.
- Funding type
- Loan
- Level
- Federal
- Amount range
- $50,000 – $5,500,000
- Realistic amount
- Total project size for most 504 deals: $500,000–$5M. The SBA debenture covers the CDC's 40% portion — so a $1M project u…
- Deadline
- Rolling — no application deadlines. Apply any time through a CDC in your area.
- Status
- active
- States
- Nationwide
- Payment model
- lump sum
Who qualifies
- For-profit business operating in the U.S. with a tangible net worth under $20 million
- Average net income after taxes under $6.5 million for the prior two fiscal years
- Meets SBA size standards for the industry
- Must occupy at least 51% of the purchased or constructed building (owner-occupancy requirement)
- For new construction: must intend to occupy at least 60% of the building
- Long-term machinery or equipment must have a useful remaining life of at least 10 years
- Business must demonstrate ability to repay from operating cash flow
- Owner(s) of 20%+ must provide personal guarantee
Hard requirements
- Requires federal certification:
What it covers
Eligible expenses
- Purchase of existing owner-occupied commercial real estate
- Construction of new facilities (business must occupy 60%+)
- Renovation or modernization of existing facilities
- Land and land improvements (parking, utilities, grading)
- Purchase of long-term machinery and equipment (10+ year useful life)
- Qualified debt refinancing (under specific conditions added under 504 Refinancing Program)
- Soft costs related to fixed asset acquisition (appraisals, title, environmental assessments — limited)
Ineligible expenses
- Working capital or inventory — 504 is strictly for fixed assets
- Rental real estate or speculative investment properties
- Refinancing existing debt unless it qualifies under the 504 Refinancing Program
- Equipment with less than 10 years of useful remaining life
- AI-related working capital, intellectual property, or consulting services
- Non-owner-occupied commercial real estate (investment properties)
How to apply
-
1
Find a Certified Development Company (CDC) in your area
CDCs are SBA-regulated nonprofits that originate and service 504 loans — they're the gateway to the program. Use the SBA's local assistance locator (sba.gov/local-assistance) to find a CDC serving your state. Large CDCs (e.g. TMC Financing, Pacific Coast Regional, Southeastern Economic Development) operate regionally and are experienced with complex projects.
~2 hrs
-
2
Secure a conventional lender for the 50% first lien
The 504 structure requires a conventional bank or credit union to fund 50% of the project as a first-lien loan. Many CDCs have preferred lender relationships. Your existing bank may be willing to participate — the bank's 50% is senior debt, so their credit exposure is lower than a standard loan. Bring your project summary, financial statements, and purchase agreement or appraisal.
~8 hrs
-
3
Apply to the CDC for the SBA debenture (40% portion)
The CDC evaluates your eligibility, project purpose, and ability to repay. Required documents: 3 years business and personal tax returns, current financial statements, business plan, appraisal (for real estate), equipment quotes and specifications (for equipment loans), purchase contract or intent to purchase. CDC packages and submits the SBA debenture application to SBA's processing center.
~25 hrs
-
4
SBA reviews and approves the debenture
SBA's Sacramento Loan Processing Center reviews the CDC's submission. Typical review: 2–4 weeks. SBA issues an Authorization and Agreement if approved. The SBA debenture is then sold to investors at closing through a certified debenture pool (which is how the fixed rate is set).
~2 hrs
-
5
Close the transaction
Closing involves three simultaneous transactions: the bank closes its first-lien loan, the CDC closes the SBA-backed second-lien debenture, and the business contributes its equity injection (minimum 10%). The CDC coordinates all three. CDC fees (approximately 3% of the SBA debenture, financeable) are paid at closing. The SBA fixed rate is set based on the 10-year Treasury rate at the time the debenture is sold.
~5 hrs
Rate is fixed at debenture pool sale — locking a 25-year below-market rate is the real value. Apply with a signed purchase contract; appraisal and Phase I environmental must be complete before SBA approves.
Deadline & timing
No program deadlines. The 504 process takes longer than standard loans — allow 45–90 days from CDC application to closing. CDCs handle all SBA coordination; you don't submit directly to SBA. Find your local CDC at sba.gov/local-assistance.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.