What is an SBA 504 Loan? 

The Small Business Administration’s SBA 504 loan or Certified Development Company (CDC) Program is an initiative to connect entrepreneurs with lenders and funding. The program offers fixed-rate, long-term financing of up to $5 million, depending on the requirement type and business. 

Who Can It Help?

Small business owners, even those who do not qualify for conventional loans, can now get the purchasing power they need for fixed assets such as real estate, buildings, and long-term machinery, at below-market rates. Small business owners or multiple owners working on the same project can also meet the CDC/504 Loan Program Eligibility.

How Does BFC Fit In?

A small business owner can only apply for SBA 504 loans through an SBA-vetted Certified Development Company like BFC.

Our team of experts includes Underwriting and Loan Services Professionals who can guide you through the SBA 504 eligibility process.

We also partner with third-party lenders such as banks to help your business get the financing it needs. 

SBA 504 Eligibility and Loan Requirements

SBA Loan Amount (Maximum)

Generally, the upper limit for loans is capped at $5 million. If your undertakings qualify as energy-efficient, green projects, you can get financing of up to $5.5 million per project with the SBA 504 Green Loan.

Interest Rate

Small business owners get fixed below-market interest rates for the entire tenure of a loan. Learn more about SBA 504 Historical Interest Rates in our updated interest rate table.

Required Equity

A down payment of just 10% is required from a small business owner instead of a conventional 30% as required by other lenders.

Maturity Terms

The SBA 504 loan can extend to a term period of 10, 20, or 25 years.

Eligibility for the SBA 504 Loan Program

If you’re applying for a 504 loan, you have to meet loan program eligibility criteria such as:

1. Be a U.S. based, for-profit business
2. Fulfill SBA small business size standards
3. Has a tangible net worth less than $15 million and an average net income less than $5 million after taxes for the preceding two years.

SBA 504 loans can be used for the construction, improvement, acquisition, revamping, or purchase of the following:

• New utilities or facilities 
• Buildings or land 
• Machinery and equipment needed for the long haul
• Streets landscapes, or parking lots

If you answered YES to all of these questions, you are likely eligible for an SBA 504 loan:

• Are you a for-profit business? 
• Has your average net profit after taxes been less than $5 million during the previous two year’s tax returns? 
• Will this loan be used to finance the acquisition, construction or renovation of real estate or the purchase of equipment? 
• If the loan is used to purchase a building, will your business occupy at least 51% of the space? 
• If the loan will be used for ground-up construction, will your business occupy at least 60% of the building now and 80% long-term? 
• All owners of 20% or more of your business, and a real estate holding company if it is formed, must be willing to guarantee the loan.

Confident about the SBA 504 eligibility criteria aforementioned? Then you can move forward and apply for an SBA loan by speaking to one of our expert loan consultants.

Kindly keep in mind that a borrower cannot use SBA 504 loans for the following. 

• Refinancing/consolidation/repayment of debt
• Rental real estate
• Gambling or pyramid schemes businesses
• Mobile home parks
• Inventory
• Apartment buildings
• Working capital

Failure to meet the SBA 504 eligibility criteria could result in a rejection. For more on this, visit our FAQs’ Eligibility section.