Business Finance Capital (BFC) is a CDC proudly serving the Greater Los Angeles business community. A Certified Development Company or CDC is a non-profit corporation that promotes economic development within its community through SBA 504 loans. A Certified Development Company is certified and regulated by the Small Business Administration and serves as a bridge between lenders and participating lenders such as banks. When a lender successfully receives a SBA 504 loan, 50% of the loan comes from a participating lender such as a bank and 40% from a CDC – this amount is fully funded by the SBA. SBA 504 loans can only be applied and gained exclusively through a CDC.

What’s a SBA 504 Loan?

A Small Business Administration (SBA) 504 loan is a terrific business loan program that helps small businesses gain the financial resources they need to acquire equipment, commercial real estate, or other commercial assets. The SBA 504 loan program is fabulous for small businesses because the loan program offers incredibly competitive rates for small businesses while requiring small businesses to put down a minimal amount for an acquisition. The SBA 504 loan structure is:

  • A participating lender such as a financial institution lends up to 50% of the total project cost.
  • A Company Development Company (CDC) offers up to 40% of the project.
  • A borrower such as a small business contributes 10% (may be up to 20% depending on the loan scenario) of the total project costs.
For example, the SBA 504 loan structure for a project that costs $1,000,000 is the following:
A participating lender loans $500,000, which is 50% of the total project.
A Company Development Company (CDC) loans $400,000, which is 40% of the total project.
The borrower contributes $100,000, which is 10% of the total project.

This competitive or resourceful loan structure gives small businesses plentiful room to gain working capital while keeping ample cash on hand.

What’s a Certified Development Company’s Role in a SBA 504 Loan Program?

A Certified Development Company acts as a middleman for applying for a SBA 504 loan. A small business can only receive a SBA 504 loan through a Certified Development Company. A small business can’t go directly to a financial institution to attain a SBA 504 loan. Key benefits of this procedure are:

  • Small business borrowers gain expert advice from a Certified Development Company on a SBA 504 loan terms, rates, and other insights related to this business loan. A Certified Development Company can recommend a specific length of a SBA 504 loan to help a small business with its cash flow. A Certified Development Company can also suggest the borrower on the type of assets the borrower should purchase using the SB