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About SBA 504 Loans

The SBA 504 Program is a long-term financing tool for economic development within a community.

The SBA 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A Certified Development Company is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses. Louisiana Capital CDC, Inc. is your #1 CDC for Louisiana.


Typically, an SBA 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped.

Coffee Shop
What Funds May Be Used For:

Proceeds from 504 loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; purchasing long-term machinery and equipment; or in some cases refinancing existing debt. The 504 Program cannot be used for working capital or inventory, consolidating or repaying ineligible debt. You can view a sample use of 504 loan proceeds under the 504 Loan Lenders section, and examples of 504 loan projects under our Borrowers section.

Terms, Interest Rates and Fees:

Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Maturities of 10, 20 and 25 years are available. Fees total approximately three (3) percent of the debenture and may be financed with the loan.


Generally, the project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.

Eligible Businesses:

To be eligible for the SBA 504 loan program, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $20 million and does not have an average net income in excess of $6.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

What is a
SBA 504 Loan?
Why a 
SBA 504 Loan?
Who is eligible for
a SBA 504 Loan?
SBA 504 Loan
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