What is a SBA CDC/504 Loan?
Small Business Administration loan program provides the SBA 504 Loans. These loans are provided to small businesses that are in need of buying equipment or real estate. The loans can be bought up to $5.5 million with a repayment term of 10 to 20 years. The rates of these loans are fixed and are long term. This CDC or Certified Development Company aims to provide loans or funding to businesses to buy assets like real estate, machinery and equipment at low rates. This loan sanctions businesses to expand without worrying about liability.
How Does a SBA CDC/504 Loan Work?
The aim is to provide breakthroughs to those people coming from or those who own small businesses. If you’re a startup looking for loans to increase your capital, then the 504-CDC loan should definitely be on your radar. Because the SBA wants to promote business development, it offers many different types of loans according to the capital requirement of the company. For the 504 loan program, there are 3 parties or entities involved. This loan is distributed among these 3 parties. The business owner lends in 10 percent, the bank puts in 50 percent and the CDC puts up the rest or the 40 percent. Factors like payment schedules, loan size and the groundwork also affect the amount of money that you need to pay for your loan. But with a 504 loan, you don’t have to worry as the down payment is really low and repayment time period is quite long. This loan will cover 90 percent of the amount.