SBA 504 

The 504 program allows small and medium-size businesses to obtain long term, fixed-rate financing at below market rates for up to 20 years. The SBA-guaranteed debentures are pooled monthly and sold to private investors.

Projects are financed per the following structure: A private lending institution covers 50 percent of the project cost. A Certified Development Company (CDC) finances 40% (not to exceed $1,000,000) through SBA The small business must invest at least 10% (15% for special purpose facility/20% for special purpose and start-up businesses)

Types of Financing

  • Acquisition / Purchases(Land and Buildings)
  • New Construction 
  • Renovations
  • Refinances
  • Machinery and Equipment

Loan Amounts  $750,000-$5,000,000

Terms 20 Years Real Estate 10 Years Machinery and Equipment

Interest Rate: Prime + .5% - 2.75% variable from primary lender (Varies by credit risk) CDC Rates typically fixed at less than Prime rates

Loan To Value: 50 - 90%

Prepayment Penalties: There is a ten year pre-pay penalty. 10%, 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%

Fees: None to minimal lender fees Packaging fee/good faith deposit Customary closing costs Construction fee, if applicable, to offset monitoring costs SBA charges a fee of approximately 2% (depending on loan amount and percentage of guarantee)


  • Owner occupied small business (No investment properties)
  • US Citizen or resident alien
  • Good credit/character
  • Management experience (Direct industry experience preferred)
  • Reasonable financial statement or credible projections
  • Business must meet SBA size standards

Collateral: First lien on land, building, equipment and inventory. Personal guaranties of the principal owners are also required. Additional outside collateral is necessary if lease-hold improvements are substantial.

Quick Response Loan decision made within 4 weeks of receipt of completed application. SBA 504 financing is a superior long term fixed rate financing option. 504 loans are normally done on larger projects. If you do not feel you would be owning the property for a longer period of time, SBA's 7(a) loan program or perhaps conventional financing would be a better alternative because of the 504's longer pre-pay penalty period. The longer pre-pay penalty is to offset the significantly lower rates offered in a bond debenture done by the CDC. Refinances are eligible.

SBA 504 financing is a great financing option.  The only disadvantages is that SBA 7(a) can finance some costs that a 504 can not.  The pre-pay penalty is long, but it is for the bond debenture portion and does not apply to the entire loan.

To prequalify for financing, download the following forms and provide the following information and fax to (202)478-1811 or email to



















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