More than a 504


Equipment 10-year Fixed


Real Estate 20-year Fixed


Real Estate 25-year Fixed


Frequently Asked Questions

If you do not see the answer to your question here, please contact one of our business development officers. He or she will be happy to help you find the answers to questions based on your borrower’s business situation.

What type of property is classified as Special Purpose?

The SBA classifies the following types of properties as Special Purpose:

  • Dormitories
  • Cold storage facilities where more than 50% of total square footage is equipped for refrigeration
  • Tennis clubs
  • Golf courses
  • Swimming pools
  • Amusement parks
  • Sports arenas
  • Bowling alleys
  • Theaters
  • Marinas
  • Gas Stations
  • Service centers with pits and in-ground lifts
  • Car wash properties
  • Hospitals and other medical or health facilities (such as surgery centers, urgent care centers)
  • Nursing homes
  • Assisted living facilities
  • Funeral homes with crematoriums
  • Cemeteries
  • Sanitary landfills
  • Museums
  • Clubhouses
  • Hotels and motels
  • Wineries
  • Railroads
  • Farms (including dairy facilities)
  • Oil wells
  • Mines
  • Quarries
  • Gravel pits.
How much of an equity contribution is required for an SBA 504 project?

Typically 10%. If the entity is considered a new business or the property is determined to be a Special Purpose Property, an additional 5% equity is required.

Can the equity contribution be financed?

Yes, under certain circumstances, CDC can offer down payment financing through the resources of BDC Capital.

Does the SBA 504 Program finance investment properties?

No, the program is designed for owner-occupied facilities.  The applicant must occupy 51% of an existing building and 60% of a newly constructed building.

What is the term of an SBA 504 loan?

20 years on real estate; 10 years on machinery and equipment (or 20 years if the estimated useful life of the equipment is longer than 10).

Is there a prepayment penalty associated with the program?

There is a declining prepayment penalty for half the term of the loan (i.e. 10-year prepayment penalty on real estate; 5-year prepayment penalty on machinery and equipment).

Why is the prepayment penalty required?

A prepayment penalty is required because investors in the secondary market are guaranteed a specific return when they purchase a pool of SBA 504 debentures subsequent to the funding of these loans.

Are personal guarantees required? If so, what are the guidelines in regards to personal guarantees?

Yes, the SBA requires personal guarantees for any individual owning 20% or more of the operating company or real estate entity. Other personal guarantees may be required if no individual owns more than 20%.

Are not-for-profits eligible for SBA 504 financing?


Is flood insurance required by the SBA if the subject property is located in a Flood Zone?


When does CDC New England reimburse the borrower for closing costs?

The closing cost reimbursement are sent to the borrower via check 7-10 business days after the funding date of the loan.

Does CDC New England offer additional financing needs beyond the SBA 504 Program?

Yes, CDC offers a suite of other financing products to complement the 504 Program, including working capital term loans, lines of credit, mezzanine investments, bridge and down payment financing, and environmental remediation loans.