SBA Loans

SBA 7(a) Loans

The SBA 7(a) loan program is designed to provide loans to small businesses in need of flexible underwriting guidelines, extended loan terms, and low down payments. To learn more about the SBA 7(a) program, visit the official SBA website at http://www.sba.gov/.

CDC/504 Loan Program

The CDC/504 loan program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

A Certified Development Company (CDC) is a private, nonprofit corporation which is set up to contribute to economic development within its community. CDCs work with the SBA and private sector companies like United Financial Services to provide financing to small businesses, which accomplishes the goal of community economic development.

Typically, a CDC/504 project includes:

  • A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost
  • A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the project cost
  • A contribution from the borrower of at least 10 percent of the project cost (equity)

This means that 100% of the project cost is covered by the borrower’s equity contribution, the senior lien, and the junior lien.

The 504 program cannot be used for working capital, inventory or consolidating debt. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

Type Best For Target Borrower Loan Amount Requirements Benefits
SBA 7(a) Real estate, business acquisitions and working capital. For-profit small business owners seeking long term financing guaranteed by the government. $250,000 – $5 million Properties must be at least 51% owner-occupied and operated. Borrowers must have adequate cash flow to cover debt levels and acceptable credit history. Provides loans to small businesses unable to secure financing through conventional credit channels, typically due to loan terms and property types.
SBA 504 Purchase of land including existing buildings, property improvements, construction of new facilities or renovating existing facilities. The purchase of longterm machinery and equipment. For-profit small business owners seeking long term financing for building or equipment. $250,000 – $11.25 million Properties must be at least 51% owner-occupied and operated. Borrowers must have adequate cash flow to cover debt levels and acceptable credit history. Providing small businesses with long-term, fixed-rate financing to acquire fixed assets for expansion or modernization.

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