For current rates and an SBA 504 Loan Calculator, click here

The Small Business Administration (SBA) 504 Certified Development Company (CDC) Loan Program was created in 1980 to promote small business expansion.  The program provides long-term, low down payment, competitively priced capital for healthy, growing businesses that have a high probability of enhancing  local employment in an area.  A CDC, typically a non-profit corporation, receives designation from the SBA to administer this economic development program.  Great Plains Development has been designated as a CDC to  work with the SBA and private sector lenders to provide small business concerns access to scarce capital. 

Typically, a 504 project includes a loan secured by a first lien from a private-sector lender that finances 50% of an eligible project’s cost, and a secured second lien from a CDC (backed by a 100% guaranteed debenture) that funds 30% to 40% of the project’s cost depending on the client's required injection. Expanding businesses require a minimum injection of 10%. A "New or Change of Ownership" business requires 15%, and a "Special Purpose" and/or "Construction" loan requires 20% injection.

 Eligibility

• Be a startup or operating business

• Be organized for profit

• Be located within the United States

• Be a small business according to SBA standards

• Meet an economic development objective of the program

• Demonstrate the need for financing

  ○  Credit not available elsewhere

  ○  Limited Liquid Resources Test

 Projects Financed

• Land acquisition
• Building acquisition and improvements
• New Construction
• Machinery and Equipment purchases
• Professional and interim loan fees

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Loan Amount

• An eligible entity may borrow up to 40% (depending on required injection) of the project’s costs or a total SBA portion of $1.5 million.
• If the project meets a Public Policy Goal the maximum portion may increase to $2 million .  
• The minimum debenture/loan should be at least $25,000 (translates to a total project size of $62,500).
• The total SBA portion cannot exceed $4 million for a small manufacturing business.

 Interest Rate

• Fixed rate indirectly based on prime and set when debentures are sold to the public.

 Repayment

• Fully amortized 10 or 20 year loans. 
• There is a prepayment penalty during the first half of the loan term.

 Collateral

• Generally, the project assets being financed are used as security.  504 loans are secured by a second lien on project assets (Land, Building, Machinery and Equipment).
• Participating private sector lenders are granted a first lien on project assets.
• Personal guarantees by the owners, and assignable key person life insurance on the owners of the business are required.

The 504 Program is an under-utilized economic development program.  The program stimulates private sector investment, increases productivity, creates and retains jobs, and increases an area’s local tax base.  The 504 program helps small businesses overcome the obstacles normally associated with traditional loan criteria.  The SBA’s involvement spreads the lending risk and thereby recruits private sector lenders to participate in projects that they would not otherwise be involved in. 

Contact a GPDI representative for more information. 

 To begin the process, download the GPDI loan application here.

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