About SBA 504 - What is it?

About SBA 504 - What is it?

What is the SBA 504 Loan Program?
The SBA 504 Loan Program is a low cost, fixed rate loan program intended for owner-occupied commercial/industrial property purchases and new construction. This highly successful U.S. Small Business Administration (SBA) loan program is offered through a partnership program between a Certified Development Company (CDC) and a participating private lender (most often a bank). California Statewide CDC partners with a wide range of leading lenders to make the SBA 504 Loan Program available to businesses throughout California.

How is an SBA 504 Project Structured?
The participating lender (bank) typically finances 50% of the total project cost through a first deed of trust loan. California Statewide CDC provides second deed of trust financing for up to 40% of the total project cost with an affordable, long term fixed rate, fully amortizing SBA-backed loan. The borrower typically puts down as little as 10% of the total project cost.

Example of a typical 504 project financing structure:

Why the SBA 504 Loan Program is Right for Business Owners.
An SBA 504 loan is a powerful tool to help your business grow. It offers:

  • Up to 90% financing, to preserve working capital for business expansion
  • Low monthly loan payments by utilizing 15- to 30-year amortization schedules from a First Mortgage Lender
  • A variety of options for interest rates from a First Mortgage Lender
  • The ability to finance the SBA fees as part of the loan, thereby reducing up-front cash outlay
"California Statewide did everything to make my deal a success."
- SS, Borrower