What is the SBA 504 loan program?
The SBA 504 loan program is a fixed asset financing program for new or growing small businesses. A 504 financing package is a partnership loan with your bank and a Certified Development Company, also known as a CDC. CDCs are licensed and regulated by the U.S. Small Business Administration (SBA).

How can an SBA 504 loan help me?
The SBA 504 program provides long term, fixed rate financing for owner-occupied commercial real estate or for the purchase and installation of equipment. The down payment can be as low as 10% of the project costs. Because the CDC is participating with your bank, you may be able to get financing that is not otherwise available on the same terms.

What are Certified Development Companies?
Oregon Business Development is a Certified Development Company. CDCs are non-profit community-service corporations that provide SBA 504 financing. CDCs are licensed and regulated by the SBA, which guarantees SBA 504 loans. Oregon Business Development is staffed by experienced professionals who work directly with small businesses and lenders to provide SBA 504 financing for business owners.

Do SBA 504 applications take a long time?
Small business owners are very busy, so we do everything we can to make the application process as easy as possible. We work directly with your bank to streamline the application and we have the technology and staff resources to underwrite your loan quickly. There are only a few SBA forms to fill out, and the process has been streamlined over the past few years. Oregon Business Development is a member of the SBA Accredited Lender Program (ALP), is qualified by the SBA to submit an abbreviated file for final SBA approval, and is a Priority Closing CDC – all of which help the application process go as smoothly as possible.

What are the fees for SBA 504 loans?
Loan origination fees are determined by SBA and are automatically included in the loan, so there are no extra out-of-pocket costs. In addition, there are closing costs, also included in the loan, for the closing attorney, recording, and other closing items. The fees are necessary to pay for funding the 504 loan: SBA 504 loans are pooled each month and the pool is converted into large bonds purchased by investors. For the average size SBA 504 loan, the total cost is approximately 2.15% for loan origination and SBA fees, plus 0.5% (one half of one percent) for closing costs related to issuing the SBA bond. These costs apply only to the CDC portion of the project. Your bank will determine the fee for its portion of the project separately, and that fee can also be included in the financing packaging, further reducing out-of-pocket costs. The overall cost will be only slightly higher than a regular commercial loan. The costs of the SBA 504 program are low in comparison to the benefits, which include a low down payment and a below-market interest rate fixed for 20 years on the CDC portion.

What types of businesses are eligible for SBA 504 loans?
Almost every type of business is eligible for SBA 504 financing. SBA 504 loans can be used for the purchase of buildings, the purchase of land and construction of a new building, and the purchase and installation of equipment. The project size can be as high as $15 million or more, although the average project size is under $2 million. The minimum project is generally $250,000. The 504 program is intended to create new job opportunities. Since most businesses will create new jobs as a result of purchasing or constructing a new building, the job creation requirement is usually easy to meet. There are some situations when the job requirement can be waived.

How do I get started?
The best way to start is by talking to your banker about your project and possible SBA 504 financing. You can also call Oregon Business Development or ask your banker to call us, because the sooner everyone can get together, the sooner we can get your application started. If you have questions about a potential project, you can always check with us first to talk about eligibility or other project issues.