What is a CDC in lending?
Certified Development Company (CDC) 504 Loan Program | What is a CDC lender? A Certified Development Company or CDC is a non-profit corporation that promotes economic development within its community through SBA 504 loans.
How does a 504 loan work?
The 504 program works by distributing the loan among three parties. The business owner puts a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a so-called Certified Development Company (CDC) puts up the remaining 40%.
What can I use a 504 loan for?
A 504 loan can be used to purchase fixed assets that “promote business growth and job creation,” according to the SBA. These assets could include a new building, equipment or machinery. You can also use a 504 loan to build or upgrade facilities, including utilities, streets or parking lots.
Will SBA 504 loans be forgiven?
For new SBA 504 loans, approved from February 1, 2021 thru September 30, 2021, borrowers will receive three months of payments subsidies. This means the SBA will be making your loan payments for you and they will not need to be paid back at any time. This loan forgiveness is capped at $9,000 per loan per month.
What is the maximum SBA 504 loan amount?
$5 million
The maximum 504 portion of the loan is $5 million for meeting the job creation criteria or community development goal. Generally, the business must create or retain one job for every $65,000 provided by SBA ($100,000 for small manufacturing).
How long does it take to get a SBA 504 loan?
between 60 and 90 days
The length of time required for an SBA 504 loan to be approved can vary drastically, but averages between 60 and 90 days. With that being said, it may take up to six months in some situations.
Are SBA 504 loans hard to get?
The short answer – No, it is not hard to get an SBA loan! The 504 loan has a unique structure, in that it is a partnership between a non-profit Certified Development Company (CDC), such as TMC Financing, which administers the SBA portion of the loan, and a conventional lender such as a bank or credit union.
Who qualifies for a 504 loan?
To be eligible for a 504 Loan, your business must:
- Operate as a for-profit company in the United States or its possessions.
- Have a tangible net worth of less than $15 million.
- Have an average net income of less than $5 million after federal income taxes for the two years preceding your application.
What is the difference between SBA 504 and 7a?
SBA 504 loans are typically larger loans in dollar amounts lent. Businesses can borrow from $125,000 up to $10 million, depending on the business’s qualifications and needs. 7a loans, meanwhile, offer smaller dollar amounts, with the maximum loan topping off at $5 million dollars.
How hard is it to get a SBA 504 loan?
The short answer – No, it is not hard to get an SBA loan! The SBA 504 loan is specifically designed to help small businesses expand by purchasing fixed assets such as real estate and equipment. It can also be used to finance construction and renovations.
What do you need to know about 504 Loan program?
Offers 90% financing, resulting in savings and improved cash flow for small businesses. 504 Loan recipients often enjoy lower rates than those with traditional loans. Recipients can include any 504 refinancing costs within the given loan. Borrowers have the option to use given equity in the fixed asset as collateral.
What does CDC stand for in loan?
CDC (Certified Development Company) and for purposes of this website also known as REsource Capital. The CDC is required to service the loan on behalf of the SBA by enforcing the terms of the loan documents.
What is a Section 504 loan?
Section 504 loans and grants are a USDA rural housing repair program authorized under Section 504 of the Housing Act of 1949 .
Is my 504 loan assumable?
Project costs can usually be financed in their entirety with a 504 loan, whereas most commercial bank loans only finance a percentage of the purchase price/appraised value and borrowers would have to come up with closing and soft costs out of pocket. If borrowers later decide to sell their property, 504 loans are assumable.