SBA 504 Loan Guarantee
SBA 504 Loan Guarantee is made through a CDC (community development company). This is a not for profit corporation that will contribute in the community for the development of increased economic and employment growth. A CDC will fund at a 100% SBA 504 guaranteed debenture.
The SBA 504 loan is actually called a SBA CDC/504 loan. The loan is made for community development through the capital injection based on the financing of fixed assets. This is a long term loan of up to 20 years.
The break down of the SBA 504 loan guarantee is as followed:
- 50% of the loan amount from a private institution (bank or private lender). This would be the first lien on the secured assets.
- 40% of the loan amount would be 100% guaranteed for the small business concern. This is considered the second lien.
- 10% (in some cases up to 15%) capital from the small business seeking the loan.
The SBA 504 loan guarantee states a guarantee for 100 percent of the loan received from the community development company, or the CDC