The 504 Loan Program gives establishes small business owners access to low-cost, fixed rate, long term financing that is typically enjoyed by much larger businesses.
Usually, a 504 Loan will minimize your down payment and maximize the term of your loan, all at a low, fixed interest rate, which is often below market interest rates.
How Does 504 Work?
504 applications can only be processed by Certified Development Companies, like Cen Cal Business Finance Group.
When you apply for an SBA 504 loan through Cen Cal, we work with the third party lenders, preparing all required documentation and process the application through approval. After approval, we close and service your loan locally for the life of the loan.
When construction is necessary, Cen Cal works with business owners and helps them arrange temporary loans that cover construction costs through a third party lender. This short-term loan is eventually paid off by the long-term, permanent SBA loan.
The typical 504 loan is structured with project costs split as follows:
- 50% is financed by a third party lender;
- 40% is financed by the SBA loan, through Cen Cal Business Finance Group; and
- 10% is provided by the borrower.
There is no limit to the loan of the third party lender. The SB loan cannot exceed $5 million unless a public policy goal is met or the borrower is a manufacturer. (A list of the various public policy goals is itemized below). Other limitations of the SBA loan are as follows:
- The SBA loan cannot exceed 40% of the project cost.
- The SBA loan cannot be more than the loan of the third party lender.
- If the project meets a public policy goal, the maximum SBA loan amount is increased to $5.5 million.