Frequently asked questions

WHAT IS A CDC?

A Certified Development Company (CDC) is authorized by the U.S. Small Business Administration (SBA) to provide SBA 504 loans. The role of the CDC is to assist small and medium-sized businesses in acquiring 504 financing in partnership with a bank or private lender. The SBA requires that the application for every SBA 504 loan originate from a CDC.

WHAT CAN I USE 504 FINANCING FOR?

  • Purchase and/or renovation of an existing building
  • Purchase of land and ground-up construction of a building
  • Purchase of equipment with a life expectancy of at least 10 years
  • Soft costs involved in the project

HOW MUCH DO I HAVE TO PUT DOWN?

  • 10% in the majority of projects
  • 15% for new business (in operation less than 2 years), or special-purpose building
  • 20% for new business AND special-purpose building

HOW MUCH CAN I FINANCE?

There is no limit to the First Mortgage, and therefore no maximum total project cost. The maximum for the Second Mortgage (typically 40% of total project cost) is:

  • Up to $5M for most projects
  • Up to $5.5M for manufacturers or energy-saving facilities with the new Green Energy Policy

Contact us to determine what the maximum SBA loan amount is for your project.

HOW LONG DOES IT TAKE TO GET THE LOAN?

Usually we recommend at least 45 days for finance contingency and 15 days after that to close escrow. However, with our Premier Certified Lender status, we are able to approve loans internally and able to close escrow in as little as 15 days.

WHAT ARE THE FEES?

The SBA mandates that all CDCs charge the same fee (2.65%) on the Second Mortgage portion of the loan (typically 40%).

IS THE SBA LOAN ASSUMABLE?

Yes, if you choose to sell your building, your SBA loan can be assumed by the buyer, and the buyer does not have to be a small business.

IS THERE A PRE-PAYMENT PENALTY?

There is no pre-payment penalty after the first 10 years. The penalty is 100% of the interest for the first year, and declines by 10% each year thereafter for the first 10 years.

Or call (415) 217-7600

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