FUNCTION: Provides long-term, fixed-rate financing to small businesses to acquire real estate or machinery or equipment for expansion or modernization. Typically a 504 project includes a loan secured from a private-sector lender with a senior lien, a loan secured from a CDC (funded by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost, and a contribution of at least 10 percent equity from the borrower. The maximum SBA debenture generally is $1 million (and up to $1.3 million in some cases).
CUSTOMER: Small businesses requiring -brick and mortar- financing.
DELIVERED THROUGH: Certified development companies (private, nonprofit corporations set up to contribute to the economic development of their communities or regions)
www.sba.gov/financing/frcdc504.html
