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Thinking for the Long Term? Get CDC 504 Loans
Small businesses that are looking for long term financing to help them help their community should consider the CDC/504 loan program for their financing needs. 504 loans and CDC
financing is a great way to get fixed financing for a long period of time, with the help of the Small Business Administration.
What is the CDC Loan Program
The SBA 504 loan program, or CDC loan program as it is otherwise known, is a loan program designed to help businesses receive financing for long term projects that are going to help improve the local communities. The SBA allows for Certified Development Companies, or CDCs, to be developed which help set up the financing in their local communities. The SBA backs all loans that the CDCs approve.
CDC approved loans are given to businesses that are growing within a local community, and need financing to help with their growth. They must show that the endeavors they are going to be using the financing for will help the local community. If they can prove that their development will improve the community, the business may be given a 504 loan.
Reputation of CDC
CDC offices have developed a strong reputation among those who own small businesses. The 504 loan program has been treated fairly, allowing businesses that clearly show the benefit to the community to have access to the financing that they need. Also, the CDC will contribute to the loan, often as much as 40%. The rest is financed through a local bank and through the business itself.
Types of CDC Loans
There are SBA 504 loans available for either ten or twenty year terms. Most often with CDC loans, the business's assets are put up as collateral for the loan. In order to be approved for the loan, the business owners must place their personal guarantee on the loan stating that it will be paid back within the term time frame.
Eligibility Criteria
In order to qualify to apply for a loan under the SBA 504 loan program, the business must meet the qualifications defined by the SBA for small businesses. This qualification can vary from state to state. Also, the business cannot be worth more than six million dollars, and also cannot have made more than two million dollars a year in the two years prior to applying for the loan. Finally, those businesses that are working in rental or investment real estate do not qualify. Otherwise it is relatively easy to qualify for financing with the 504 loan program if you are a small business.
Continue to: Important Info on SBA 504 loans
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