How is an SBA 504 project financed?
An SBA 504 project has three main components: A third party lender who provides 50% or more of the financing, a Certified Development Company (CDC) who provides up to 40% of the financing, and the applicant (borrower) who provides at least 10% of the financing. If the borrower is a start-up business (management has been in this business less than 2 years) or the property is a special use property then the applicant’s share of the project increases to 15% and the CDC’s decreases to 35%. If both of the above are true, start-up and special use, then the applicant’s share would increase to 20% and the CDC’s reduced to 30%.
