Established over 30 years ago, the U.S Small Business Administration (SBA) 504 loan is an economic development tool that offers small businesses fixed-rate, long-term financing to help them acquire owner-occupied commercial property and equipment while retaining their working capital.

So, How Are SBA 504 Loans Funded?

Despite several misconceptions about SBA 504 loan funding, 504 loans do not come directly from the SBA. Instead, the SBA 504 loan program is funded when private investors (usually institutional investors like insurance companies, pension funds, large banks, and some individuals under particular circumstances) buy your loan from a Certified Development Company (CDC) in an SBA 504 loan debt monthly sale. That CDC debt is a government guaranteed debenture that is fully guaranteed by the SBA.

How The Funding Works

Where Do SBA 504 Loan Funds Come From? by BFC Funding

  1. A Certified Development Company such as Business Finance Capital (BFC) helps prepare