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SBA 504 Loan
An SBA 504 loan is a long-term fixed-rate loan for major fixed-asset purchases, typically real estate or heavy equipment.
Last updated Reviewed by ICG Funding
Definition
What it means.
The 504 program uses a 50/40/10 structure: 50% bank loan, 40% CDC (Certified Development Company) second mortgage backed by the SBA, and 10% borrower equity. Fixed rates on the CDC portion are among the lowest available to small businesses.
504 loans must finance long-lived assets (real estate, heavy machinery) that create or retain jobs. They are not used for working capital, inventory, or debt refinance outside specific program rules.
Now what?
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