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The US Small Business Administration 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. As part of its mission to promote the development of businesses, the SBA offers a number of different loan programs tailored to specific capital needs of growing businesses. The 504 program works by distributing the loan among three parties. The business owner puts a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a so-called Certified Development Company (CDC) puts up the remaining 40%. Certified Development Companies are established under the 504 code as non-profit corporations set up to support economic growth in their local areas. There are a few hundred such CDCs nationwide. The maximum amount of the loan is $1 million (1.3 million in special circumstances), and if the borrower defaults, the private sector lender is paid off first, reducing the risk to the lender and encouraging loans.

References

1. Vance, David E. (2005). Raising Capital. Springer. p. 64. ISBN 978-0387253190. {{cite book}}: |access-date= requires |url= (help); Cite has empty unknown parameter: |coauthors= (help); More than one of |pages= and |page= specified (help)
2. Tyson, Eric (2008). Small Business for Dummies (3 ed.). Wiley. p. 88. ISBN 978-0470177471. {{cite book}}: |access-date= requires |url= (help); More than one of |pages= and |page= specified (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)

External links

CDC/504 loan program at the SBA

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