Deal Structure & Financing
SBA 504 Loan
An SBA loan program providing long-term, fixed-rate financing for major fixed assets and owner-occupied real estate, structured across two lenders and a borrower equity contribution.
A U.S. Small Business Administration loan program designed to finance the acquisition or improvement of major fixed assets, primarily owner-occupied commercial real estate and heavy equipment. The structure involves three parties: a conventional lender (typically a bank) providing approximately 50 percent of the project cost, a Certified Development Company (CDC) providing up to 40 percent via an SBA-guaranteed debenture, and the borrower contributing a minimum equity injection of 10 percent. Unlike the SBA 7(a) program, the 504 is not the standard vehicle for business acquisition financing absent a significant real estate or fixed-asset component. (See also: SBA 7(a) Loan, Equity Injection, Project Cost.)