SBA 504 Loans: the UCEDC / Commercial Lender Partnership


The SBA 504 program combines the resources of a commercial lender, a CDC, and the borrower for long-term financing of owner-occupied property and major equipment purchases.  Bank typically finances 50% with first lien position; CDC, 40% with second lien; borrower, 10% equity contribution.


CDC maximum is 40% of total project, up to $5 million (SBA guaranteed debenture)


For-profit businesses that meet the SBA’s small business size definition.  Non-profits, religious institutions, real estate investors, and financial institutions do not qualify.


  • Construction, purchase or improvement of owner-occupied property
  • Purchase of long-life equipment

Benefits to Customer (on 2nd lien)

  • Long-term financing, 10-25 years
  • Below-market fixed rates (set when pooled debentures are sold monthly)
  • As little as 10% down
  • Financing of fees and closing costs

Benefits to Bank

  • First lien position
  • 50% loan/value ratio
  • Greater portfolio diversity & credit risk management
  • Ability to service more customers
  • Improved competitive position
  • CRA credit

UCEDC Criteria

  • 10% equity (15% if special purpose)
  • Personal guarantee
  • Minimum score – 650
  • Minimum DCR – 1.15:1
  • Must have industry-specific experience

More Information