The Small Business Administration 504 Loan Program is a long-term financing tool that promotes economic development within a community. The 504 Program provides small businesses with long-term, fixed-rate financing to acquire major fixed assets such as real estate or machinery and equipment for expansion or renovation. The small business is able to obtain up to 90% financing on these assets. Typically, the financing structure is as follows:
| Source | % of Project | Lien Position | Interest Rate & Term | Maximum Loan |
| Bank | 50 | 1st | Market | No Maximum |
| CDC New England (SBA Debenture) | 40 | 2nd | 20 years fixed Real Estate or 10 years fixed Equipment | $5,000,000
($5,500,000 per project for manufacturers and green projects) |
| Borrower | 10 |
Use of Proceeds
Proceeds from 504 loans can be used for any of the following:
- Purchase of land and improvements, including an existing building
- Construction of a new facility
- Modernizing or renovating an existing facility
- Providing leasehold improvements
- Purchase of machinery and equipment with a minimum useful life of 10 years
- Other soft costs associated with any of these aforementioned projects
Eligibility
To be eligible for the SBA 504 Loan Program, an applicant must be a for-profit organization and fall within the size standards set forth by the SBA. The business qualifies as small if it does not have a tangible net worth in excess of $15 million and does not have an average net income after taxes in excess of $5 million for the preceding two years.
CDC New England’s affiliate, BDC Capital, allows us to offer a suite of other financing products to complement the SBA 504 Program, including asset-based lines of credit, term loans, mezzanine investments, and bridge and down payment financing. Visit BDC Capital’s website to learn more.
