SBA 504 Loan Program


The SBA 504 loan program is a financing option that helps small businesses purchase real estate, equipment, and other fixed assets. To finance a project with a 504 loan, a Certified Development Company (CDC) and a private sector lender each finance a portion of the project.  The typical components of a CDC/504 loan include a loan from a certified development company (CDC) for up to 40% of the total project cost, a conventional lender providing 50%, and the borrower contributing the remaining 10%.

A CDC is typically a nonprofit corporation set up to contribute to the economic development of its community. These mission-based lenders are located nationwide and operate primarily in their state of incorporation. CDCs receive approval to operate from the Small Business Administration (SBA).

Because of the nuisances of the 504 program, we encourage potential borrowers inquiry into the number of 504 loans the CDC and/or private bank has closed over the past year. Experienced, active CDCs and SBA lenders tend to close more loans and do so more proficiently than those not as experienced.

Unlike traditional SBA 7(a) loans, 504 loans must be fully collateralized by the assets being acquired. As a result of this limitation, the 504 program isn’t nearly as widely deployed by financiers as the 7(a) lending program. However, 504s may be an attractive alternative  due to lower down payments requirements with certain loans.


SBA 7a versus 504 loans

SBA 504 loans are take longer and are more complex in nature in than 7a loans. As a result, SBA lenders who do both 7a and 504 loans frequently steer borrowers to the 7a program if a 7a loan is palatable for the borrower. Here are the key differences between the two programs:

FeatureSBA 7(a) LoanSBA 504 Loan
Loan PurposeBroad range of business usesAcquisition or improvement of fixed assets (including real estate)
Loan AmountUp to $5 millionNo maximum limit, typically over $10 million
Use of FundsReal estate purchase, construction, refinancing, working capital, equipment, and moreAcquisition, renovation, or construction of fixed assets (land, buildings)
Down PaymentTypically 10% – 20%Minimum borrower contribution of 10%
Lender InvolvementLender provides financing and works directly with the borrowerLoan split between a Certified Development Company (CDC), a lender, and borrower
Loan StructureSingle loanTwo loans – First mortgage from a lender, second mortgage from a CDC
Loan TermsFlexible, up to 25 years for real estate10 or 20-year terms for CDC loan, typically matched with the term of the first mortgage
Interest RatesNegotiated between lender and borrower, subject to SBA capsFixed or variable rates set by the CDC, below-market rates for the CDC portion
Borrower RequirementsSatisfy SBA eligibility criteria, demonstrate repayment ability, good credit historySatisfy SBA eligibility criteria, owner-occupancy required, create or retain jobs
Job Creation/RetentionNot a specific requirementMust create or retain jobs based on SBA job creation targets
Application ProcessDone through an SBA-approved lenderCDC and lender collaborate in the application process
SBA GuaranteeUp to 85% guarantee on loansTypically 40% – 50% guarantee on the CDC portion

It’s important to note that the specific terms and requirements for both SBA 7(a) and SBA 504 loans can vary depending on the lender and the borrower’s circumstances. This table provides a general overview of the main differences between the two loan programs for real estate purposes. Consulting with an SBA-approved lender or a financial advisor can provide more detailed information based on your specific needs and situation.

It’s important to note that the specific terms and requirements for both SBA 7(a) and SBA 504 loans can vary depending on the lender and the borrower’s circumstances. This table provides a general overview of the main differences between the two loan programs for real estate purposes. Consulting with an SBA-approved lender or a financial advisor can provide more detailed information based on your specific needs and situation.

Top SBA 504 CDCs by State

State RankProject StateCDC NameCDC Headquarters# LoansAvg CDC LoanAvg 3rd Loan
1AlaskaEvergreen Business CapitalSeattle, WA6$951,667$1,809,687
1AlabamaSouthern Development CouncilMountain Brook, AL8$558,875$741,642
2AlabamaFlorida First Capital FinanceTallahassee, FL5$828,200$895,538
1ArkansasRural Missouri, Inc.Jefferson City, MO9$653,444$745,826
1ArizonaMortgage Capital Development COakland, CA30$737,833$974,720
2ArizonaCDC Small Business Finance CorSan Diego, CA29$853,724$1,013,790
3ArizonaBusiness Development Finance CTucson, AZ8$923,500$1,208,768
1CaliforniaBusiness Finance CapitalLos Angeles, CA148$1,075,851$1,372,510
2CaliforniaMortgage Capital Development COakland, CA145$1,157,159$1,438,110
3CaliforniaCDC Small Business Finance CorSan Diego, CA143$1,255,378$1,547,976
1ColoradoB:Side CapitalDenver, CO48$750,083$1,207,399
2ColoradoDenver Urban Economic DevelopmDenver, CO10$1,270,500$1,591,762
3ColoradoPikes Peak Regional DevelopmenColorado Springs, CO7$1,009,143$1,354,669
1ConnecticutNew England Certified DevelopmWakefield, MA22$805,909$1,016,508
2ConnecticutCommunity Investment CorporatiHamden, CT20$466,500$642,868
3ConnecticutHousatonic Industrial DevelopmDanbury, CT3$409,667$495,000
1FloridaFlorida First Capital FinanceTallahassee, FL114$712,465$914,178
2FloridaFlorida Business Development CTampa, FL95$723,232$907,604
3FloridaSunshine State Economic DeveloClearwater, FL26$517,115$634,974
1GeorgiaCapital Partners Certified DevAtlanta, GA19$1,303,211$1,596,756
2GeorgiaFlorida Business Development CTampa, FL12$689,750$811,079
3GeorgiaSmall Business Access PartnersGainesville, GA12$713,667$895,092
1HawaiiHEDCO Local Development CorporHonolulu, HI5$314,200$378,903
1IowaIowa Business Growth CompanyJohnston, IA9$937,556$1,378,500
2IowaDakota Business FinanceSioux Falls, SD5$920,800$1,448,200
3IowaSiouxland Economic DevelopmentSioux City, IA3$1,721,000$2,667,482
1IdahoCapital Matrix, Inc.Boise, ID18$664,556$837,850
2IdahoRegion IV Development CorporatTwin Falls, ID12$297,417$360,306
3IdahoEast-Central Idaho DevelopmentRexburg, ID7$850,857$1,113,381
1IllinoisSmall Business Growth CorporatSpringfield, IL102$778,853$944,842
2IllinoisSomerCor 504, Inc.Chicago, IL56$732,643$992,588
3IllinoisWessex 504 CorporationNorthfield, IL5$1,156,400$1,711,240
1IndianaIndiana Statewide Certified DeIndianapolis, IN17$429,471$497,424
2IndianaPremier Capital CorporationIndianapolis, IN14$623,071$802,160
3IndianaCommunity Development CorporatFort Wayne, IN7$1,161,143$1,385,261
1KansasRural Missouri, Inc.Jefferson City, MO7$765,857$966,304
2KansasWakarusa Valley Development, ILawrence, KS4$273,750$355,935
1KentuckyCapital Access Corporation - KLouisville, KY4$405,750$435,493
2KentuckyCommunity Ventures CorporationLexington, KY4$318,000$390,625
1LouisianaLouisiana Capital Certified DeLafayette, LA3$680,333$746,380
1MassachusettsGranite State Economic DevelopPortsmouth, NH46$575,217$802,620
2MassachusettsBay Colony Development CorporaWaltham, MA46$611,913$780,696
3MassachusettsNew England Certified DevelopmWakefield, MA24$984,708$1,273,163
1MarylandBusiness Finance Group, Inc.Fairfax, VA8$1,065,500$1,403,188
1MaineGranite State Economic DevelopPortsmouth, NH38$574,447$775,264
2MaineNew England Certified DevelopmWakefield, MA3$1,017,667$1,645,833
1MichiganMichigan Certified DevelopmentEast Lansing, MI35$699,886$917,999
2MichiganEconomic Development FoundatioGrandville, MI16$984,500$1,419,457
3MichiganOakland County Business FinancWaterford, MI6$480,000$554,871
1MinnesotaMinnesota Business Finance CorSt. Cloud, MN45$561,244$709,449
2MinnesotaTwin Cities-Metro Certified DeVadnais Heights, MN31$738,903$964,209
3MinnesotaAmplio Economic Development CoArden Hills, MN15$554,400$748,125
1MissouriRural Missouri, Inc.Jefferson City, MO14$802,500$996,431
2MissouriEnterprise Development CorporaColumbia, MO3$538,333$701,293
1MontanaCapital Matrix, Inc.Boise, ID8$283,250$372,931
2MontanaDakota Business LendingFargo, ND6$675,667$901,625
3MontanaBig Sky Economic Development CBillings, MT6$727,000$775,741
1North CarolinaBusiness Expansion Funding CorCharlotte, NC15$1,015,667$1,265,628
2North CarolinaCarolina Business CapitalCharlotte, NC7$763,714$970,621
3North Carolina504 Capital CorporationChesapeake, VA6$1,444,167$1,813,828
1North DakotaDakota Business LendingFargo, ND11$421,000$537,375
2North DakotaMinnesota Business Finance CorSt. Cloud, MN5$575,200$653,790
3North DakotaLewis & Clark Certified DeveloMandan, ND3$333,000$402,227
1NebraskaNebraska Economic DevelopmentLincoln, NE10$632,400$754,793
1New HampshireGranite State Economic DevelopPortsmouth, NH36$548,250$705,343
2New HampshireBay Colony Development CorporaWaltham, MA10$375,500$460,336
3New HampshireCapital Regional Development CConcord, NH9$460,444$591,417
1New JerseyTrenton Business Assistance CoMercerville, NJ26$1,095,385$1,448,463
2New JerseyEmpire State Certified DevelopAlbany, NY12$1,452,500$1,794,330
3New JerseyEastern American Certified DevPalisades Park, NJ6$559,667$639,583
1New MexicoCapital Certified DevelopmentAustin, TX10$541,300$612,552
2New MexicoEnchantment Land Certified DevAlbuquerque, NM10$505,400$622,906
1NevadaNevada State Development CorpoLas Vegas, NV30$715,800$874,723
2NevadaMortgage Capital Development COakland, CA23$728,087$887,084
3NevadaCDC Small Business Finance CorSan Diego, CA4$612,500$758,675
1New YorkEmpire State Certified DevelopAlbany, NY73$1,228,616$1,703,794
2New YorkTrenton Business Assistance CoMercerville, NJ17$1,752,471$2,198,059
3New YorkBusiness Initiative CorporatioBronx, NY6$1,057,167$1,269,667
1OhioOhio Statewide Development CorColumbus, OH17$346,706$437,423
2OhioCommunity Capital DevelopmentDublin, OH15$515,067$623,105
3OhioAlloy Development Co., Inc.Cincinnati, OH11$1,202,636$1,563,867
1OklahomaSmall Business Capital CorporaTulsa, OK3$516,333$625,082
1OregonNorthwest Business DevelopmentSpokane Valley, WA17$833,471$1,082,073
2OregonCascade Capital FundingSalem, OR11$988,091$1,198,852
3OregonEvergreen Business CapitalSeattle, WA11$1,016,182$1,283,404
1PennsylvaniaSouth Eastern Economic DevelopExton, PA20$621,350$779,972
2PennsylvaniaRegional Development Funding CPittsburgh, PA15$565,333$680,829
3PennsylvaniaEmpire State Certified DevelopAlbany, NY13$935,231$1,185,016
1Puerto RicoCorporation para el Fromento ESan Juan, PR3$146,333$174,427
1Rhode IslandOcean State Business DevelopmeWarwick, RI14$413,286$487,261
2Rhode IslandNew England Certified DevelopmWakefield, MA7$467,429$603,339
3Rhode IslandBay Colony Development CorporaWaltham, MA3$320,667$386,667
1South CarolinaProvident Business Financial SWest Columbia, SC10$983,200$1,459,025
2South CarolinaAppalachian Development CorporGreenville, SC5$474,000$576,500
1South DakotaDakota Business FinanceSioux Falls, SD15$415,200$503,627
2South DakotaSouth Dakota Development CorpoSioux Falls, SD4$653,250$694,624
3South DakotaFirst District Development ComWatertown, SD3$319,000$379,500
1TennesseeBrightbridge, Inc.Chattanooga, TN3$884,000$2,397,008
1TexasCapital Certified DevelopmentAustin, TX38$1,033,000$1,273,473
2TexasLiftFund, Inc.San Antonio, TX14$923,786$1,496,885
3TexasGreater East Texas Certified DTyler, TX9$919,000$1,052,008
1UtahMountain West Small Business FSalt Lake City, UT107$738,916$903,280
2UtahUtah Certified Development ComOgden, UT30$1,019,433$1,229,533
3UtahB:Side CapitalDenver, CO5$1,312,800$1,557,124
1VirginiaBusiness Finance Group, Inc.Fairfax, VA18$549,500$678,186
2Virginia504 Capital CorporationChesapeake, VA15$596,800$701,450
3VirginiaRappahannock Economic DevelopmFredericksburg, VA5$465,600$563,000
1VermontGranite State Economic DevelopPortsmouth, NH7$550,429$768,179
1WashingtonNorthwest Business DevelopmentSpokane Valley, WA26$1,058,885$1,589,624
2WashingtonEvergreen Business CapitalSeattle, WA25$848,800$1,016,170
3WashingtonAmeritrust CDCEdmonds, WA9$652,778$784,102
1WisconsinWBD, Inc.Madison, WI104$747,644$906,589
2WisconsinRacine County Business DevelopSturtevant, WI4$525,000$635,750
1West VirginiaRegional Development Funding CPittsburgh, PA3$654,000$895,000
1WyomingFrontier Certified DevelopmentCasper, WY5$223,400$292,460

Note: “Avg 3rd Loan” is the average loan made by a private lender. The total debt for the average 504 borrower would be the combination of the average CDC loan and the average 3rd party loan.

State rankings based on number of loans approved and disbursed during last year (minimum of three loans).

Top 10 SBA 504 CDCs Nationally

Certified Development CorpCDC HdqtrsAvg 2022 loan20222021202020192018
Mortgage Capital Development CorpOakland, CA$1,045,51811421
CDC Small Business Finance CorpSan Diego, CA$1,174,16422312
Business Finance CapitalLos Angeles, CA$1,075,8513499**
Granite State Economic DevelopPortsmouth, NH$585,64145843
Florida First Capital FinanceTallahassee, FL$712,93356135
California Statewide CertifiedDavis, CA$1,167,1096****10**
Mountain West Small Business FinanceSalt Lake City, UT$743,91677656
Florida Business Development CorpTampa, FL$741,12783287
Small Business Growth CorpSpringfield, IL$756,20991010**8
WBD, Inc.Madison, WI$772,655108579
Empire State Certified DevelopmentAlbany, NY**9764
Evergreen Business CapitalSeattle, WA********10
** Not in top 10 for calendar year
Note: Rankings based on # of closed loans


Top SBA 504 lenders

There were 1,289 SBA 504 loans issued last year, so there are not many banks that participate in the program. The top 504 lenders do a large percentage of the total 504 loans as CDCs tend to partner with banks with vast experience. JP Morgan Chase, the top SBA 504 lender, did  132 loans last year, which equates to roughly 10% of all 504 loans. The top dozen 504 banks did 49% of all the loans last year. Here are the top 504 lenders ranked by loans issued last year:


RankBank NameBank HeadquartersAvg CDC LoanAvg 3rd Loan# of Loans
1JP Morgan Chase BankColumbus, OH$882,523$1,076,296132
2Zions BankSalt Lake City, UT$906,148$1,096,27281
3Bank of AmericaCharlotte, NC$1,040,961$1,240,32976
4Bank Five NineOconomowoc, WI$1,127,583$1,422,06348
5Wells Fargo BankSioux Falls, SD$1,148,800$1,419,24645
6Harvest Commercial CapitalLaguna Hills, CA$967,773$1,158,61844
7City National BankLos Angeles, CA$1,282,452$1,644,94942
8First Citizens BankMason City, IA$972,919$1,160,83037
9KeybankCleveland, OH$717,118$999,23534
10Glacier BankKalispell, MT$747,303$918,97633
11MUFG Union BankSan Francisco, CA$1,854,303$2,596,91333
12CalPrivate BankLa Jolla, CA$976,000$1,106,90925
13First Citizens BancsharesRaleigh, NC$784,833$973,54524
14U.S. BankCincinnati, OH$514,292$650,87624
15First-Citizens Bank & TrustRaleigh, NC$854,130$1,066,30323
16Tri Counties BankChico, CA$663,217$855,62023
17Meadows BankLas Vegas, NV$924,273$1,126,89422
18Redwood CuSanta Rosa, CA$684,227$790,84322
19Community Banks of ColoradoGreenwood Village, CO$1,398,750$1,797,44520
20M&T Bank CorporationBuffalo, NY$1,009,263$1,423,71719
21Mountain America FcuSandy, UT$858,053$1,068,86019
22MVB BankFairmont, WV$1,055,737$1,374,54519
23Poppy BankSanta Rosa, CA$1,940,222$2,855,46218
24TD BankWilmington, DE$760,529$916,61717
25Enterprise Bank And TrustLowell, MA$653,529$819,28517


SBA 504 loan interest rates

Interest rates for SBA 504 loans are determined by the market and the current cost of funds to the U.S. Treasury. The SBA works with Certified Development Companies (CDCs) to provide financing to small businesses through the 504 loan program.

The 504 loan program provides long-term, fixed-rate financing to help small businesses acquire real estate, buildings, and other fixed assets. These loans are structured with a first mortgage from a private lender covering up to 50% of the project cost, a second mortgage from the CDC covering up to 40% of the project cost, and a down payment of at least 10% from the borrower.

The interest rate for the CDC portion of the loan is fixed at the time the loan is funded and is based on the current market rate for five-year and ten-year U.S. Treasury issues. The rate for the private lender portion of the loan is negotiated between the borrower and the lender and is typically higher than the CDC portion.

The interest rate for the CDC portion of the loan is typically lower than the interest rate for conventional financing, as the loan is guaranteed by the SBA. This lower interest rate can result in significant savings for small businesses over the life of the loan.

It is important to note that interest rates for SBA 504 loans may vary depending on the current market conditions and the borrower’s creditworthiness. Small businesses looking to obtain an SBA 504 loan should work with a qualified lender or CDC to determine the current interest rate and other terms of the loan.

As shown by the chart below, 504 loan rates have increased dramatically over the past few years as the Federal Reserve has raised interest rates, which increased the rates investors demanded for treasury bills. The 504 loan rates have stabilized in 2023, albeit at high levels relative to the prior few years.


FAQs related to SBA 504 loan program


Whare are the eligibility requirements for a 504 loan?

To be eligible for the SBA 504 loan program, a business must be a for-profit, small business that operates in the United States and has a tangible net worth of less than $15 million and an average net income of less than $5 million after taxes for the preceding two years.


What are the eligible uses of proceeds?

A 504 loan can be utilized for  purchasing or refinancing fixed assets, such as real estate, buildings, land, and equipment, as well as financing improvements to existing assets.


Where to apply?

To apply for a 504 loan, you can contact a certified development company (CDC) in your area.


What are the loan terms?

504 loans are typically repaid over a period of 10-25 years, and payments are made directly to the CDC. Over 90% of SBA 504 loans are for 25 years, as evidenced by last year’s closed 504 loans:

504 Loan TermTotal Loans in $$% of LoansAvg Loan# of Loans
10 years$25,942,0001%$682,68438
20 years$221,777,0008%$614,341361
25 years$2,419,010,29091%$889,0152,721


How does a 504 loan differ from the SBA’s 7(a) program?

The main differences between an SBA 504 loan and a 7a loan are that 504 loans are specifically for fixed asset financing, while 7a loans can be used for a wider range of business purposes. Additionally, 504 loans require a lower down payment and have longer repayment terms than 7a loans. The SBA 7(a) loan program is much larger than the 504 program.


What are the public policy goals of the 504 loan program?

The public policy goals of a 504 loan include promoting economic development and job creation by helping small businesses access affordable financing for fixed assets. The community development goals of a 504 loan include providing financing to businesses in underserved communities and promoting the development of businesses that contribute to the local economy.


What is the interest rate for a 504 loan?

The interest rate varies based on the lender and the specific terms of the loan. In addition to interest, 504 loans include an annual service fee of .642% to .682%.


How does the SBA 504 loan program work?

Under the SBA 504 loan program, a borrower typically obtains a loan from a certified development company (CDC) for up to 40% of the total project cost, a conventional lender provides 50%, and the borrower contributes the remaining 10%. The SBA guarantees the CDC loan, which helps reduce the risk for the CDC and makes it easier for the borrower to obtain financing.


What are the eligibility requirements for the SBA 504 loan program?

To be eligible for the SBA 504 loan program, a business must be a for-profit, small business that operates in the United States and has a tangible net worth of less than $15 million and an average net income of less than $5 million after taxes for the preceding two years.


What can SBA 504 loans be used for?

SBA 504 loans can be used to purchase or refinance fixed assets, such as real estate, buildings, land, and equipment, as well as to finance improvements to existing assets.