Real Estate and Equipment Loans

The CDC/504 Loan Program provides financing for major fixed assets such as equipment or real estate.

CDC/504 Loan Program Eligibility

To be considered for a Certified Development Company(CDC)/504 loan, applicants must meet these eligibility requirements:

• Operate as a for-profit company
• Do business (or propose to) in the United States or its possessions
• Has a tangible net worth less than $15 million and an average net income less than $5.0 million after taxes for the preceding two years.
• Loans cannot be made to businesses engaged in speculation or investment in rental real estate.
• Be an eligible type of business. While the vast majority of businesses are eligible for financial assistance from the SBA, some are not. Check this list of eligible and ineligible types of businesses to see if your company qualifies.
• Under the 504 Program, Plan to use proceeds for an approved purpose. CDC/504 loan proceeds may be used for the financing of fixed assets like real estate or equipment. This list explains Eligible and Ineligible Use of Proceeds.
• Not have funds available from other sources. SBA does not extend financial assistance to businesses when the financial strength of the individual owners or the company itself is sufficient to provide all or part of the financing. Both business and personal financial resources are reviewed as part of the eligibility criteria. If these resources are found to be excessive, the business will be required to use those resources in lieu of part or all of the requested loan proceeds.
• Ability to repay the loan on time from the projected operating cash flow of the business
• Good character. SBA obtains a “Statement of Personal History” from the principals of each applicant firm to determine if they have historically shown the willingness and ability to pay their debts and whether they have abided by the laws of their community
• Relevant management expertise
• Feasible business plan
• Use of CDC/504 Loan Proceeds

A 504 loan can be used for:

• The purchase of land, including existing buildings
• The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
• The construction of new facilities or modernizing, renovating or converting existing facilities
• The purchase of long-term machinery and equipment

A 504 loan cannot be used for:

• Working capital or inventory
• Consolidating, repaying or refinancing debt
• Speculation or investment in rental real estate