FAQ

If you have a current SBA loan with TMC Financing please click here for our Loan Servicing FAQ page.

View TMC's Glossary of SBA Financing terms.

What is the 504 loan program?

The U. S. Small Business Administration (SBA) created the 504 loan program in 1980 to provide financing to small businesses for owner-occupied commercial real estate at below market interest rates and with low down payments

What is a CDC?

A Certified Development Company (CDC) is a private corporation certified by the U.S. Small Business Administration (SBA) to provide SBA 504 loans. The role of the CDC is to assist the small business in obtaining 504 financing in partnership with a private lender. The SBA requires that the application for every SBA 504 loan originate from a CDC.

How is a 504 project structured?

Using a $1 million sample project, the structure would typically look like this:

FAQ Chart

The SBA 504 program includes a first-mortgage loan (typically 50% of the total project) from a bank or non-bank lender. The CDC makes a 40% second mortgage loan and the borrower makes a 10% injection in most cases.

How is the borrower’s injection determined?

  • 10% – Majority of projects
  • 15% – If the business is a start or a new business (in operation less than 2 years), or special-purpose property
  • 20% – If the project is both a start-up and special-use property
  • Equipment-only loans may qualify with 10% or 15% injections

What is the maximum amount available for financing?

There is no maximum total project cost

SBA 504 loan maximum:

  • $5,000,000 - For all projects that meet SBA eligibility criteria
  • $5,500,000 - Per project for manufacturers (defined by SIC code) or businesses/projects that produce renewable energy

Contact us to determine what the maximum SBA loan amount is for your project.

Who is eligible for 504 financing?

  • Businesses organized as for-profit
  • Businesses that will occupy 51% or more of the building within one year (60% occupancy is required for new construction)
  • Businesses that meet SBA size standards

What can 504 financing be used for?

  • Purchase of an existing building – 51% occupancy required
  • Remodeling or rehabilitation of an existing building
  • Acquisition of vacant land and construction of a building – 60% occupancy required
  • Equipment acquisition – Life expectancy of at least 10 years required
  • Soft costs involved in above projects