The SBA 504 program provides financing for facilities or equipment for growing small business with loan terms not available to small business through conventional financing. By leveraging 50% traditional financing sources with 40% SBA guaranteed 504 loans, small business receive a balanced package allowing business growth and job creation.
Primary advantages to the small business :
Up to 90% financing preserves working capital and removes significant barriers to small business expansion
Up to 25-year fully amortizing term allows business to match cash outflow with life of assets which preserves cash for operations
Competitive pricing with up to 25-year fixed rates allows business to remain competitive, stabilize occupancy costs, and focus on growth
Benefits to the local community :
Jobs created a healthy, growing small business
Tax increased from jobs created and addition to real estate tax base
Reduces risk of small business expansions by allowing business to preserve cash for operations which stabilizes small business and helps it continue to be an important economic force in local community
Certified Development Companies (CDCs) are nonprofit organizations that offer affordable financing to small businesses and are certified and regulated by the Small Business Administration (SBA). CDCs facilitate the 504 Loan Program and other SBA programs from beginning to end. There are 230 CDCs nationwide, each covering a specific geographic area.
What Can the 504 loan be used for?
504 loans can be used to purchase land, buildings and equipment, as well as various property improvements and energy upgrades. You can use the funds to buy, construct, or repurpose a building including any renovations necessary.
How much can I borrower with a 504 loan?
The maximum size of the SBA debenture per project is $5 million or $5.5 million for manufacturers or energy efficient projects. However there is no limit on the first mortgage or the total project size.
Can I pay off my 504 loan early?
Yes, you can. There is no penalty if you pay off your 504 loan at any time in the second half of the loan’s term. The prepayment penalty in the first half of the term begins at the debenture rate and declines by 10% annually, calculated at six-month intervals.
How long will it take SBA to review and approve my application?
SBA needs 5-7 days to review and approve your application. Once SBA has issued an approval, you will receive an “Authorization for Debenture Guarantee” which outlines the terms of the 504 loan.
Is the loan assumable?
If you are selling the building, a qualified buyer can assume your loan for a $1,000 assumption fee. The pre-payment penalty does not apply in this instance.
Use this simple tool to explore SBA 504 financing options. The results of this tool are for discussion purposes only.
1. Project Cost
2. Source of Funds
Bank Loan (50%)
SBA 504 Loan (40%)
3. SBA 504 Debenture Pricing
SBA Guarantee Fee (0.5 %)
Funding Fee (0.25%)
CDC Processing Fee (1.5%)
Underwriters Fee (0.04% of gross)
Balance to Borrower
4. Debt Service
SBA 504 Loan Debenture
Total Monthly Payment
Annual Debt Service
“We have had the opportunity to work with BFG on six successful projects over eight years. BFG has been a major player in our success, substantial growth and job creation. The relationship with BFG has increased our profits and established several long real estate investments that will have positive long-term effects.”