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	Business Loan Certified Development Company (504) Loan Program The Small Business Administration (SBA) works with various organizations and business to promote job growth and economic development. The SBA Certified Development Company (504) Loan Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. The SBA works with Certified Development Companies (CDC) and private lenders in providing the loan program to small businesses. A CDC is a nonprofit corporation that contributes to the economic development of a community. Currently, there are approximately 270 CDC's across the country. In providing 504 Loans, the CDC's work with both the SBA and private lenders to basically share the loan. Fifty percent of the loan comes from the private lender while 40% of the loan is funded by the CDC with a SBA guaranteed debenture. The small business is then responsible for a contribution of at least 10% equity. To be eligible for the 504 Loan Program, a business must be operated for profit and comply with the SBA Size Standards. The business must not have a tangible net worth of more than $7 million. For the two years prior to application the business shouldn't show an average net income in excess of $2.5 million after taxes. No loans are approved for businesses engaged in the speculation or investment in rental real estate. When a business can create or retain one job for every $50,000 provided by the SBA, the SBA will provide a maximum debenture of $1.5 million. However, special provisions apply for small manufacturers. They have a $100,000 job creation or retention goal and are eligible for a $4 million debenture. When a business is meeting a public policy goal, the maximum SBA debenture is $2 million. There are several public policy goals that qualify, including: business district revitalization; expansion of exports or minority businesses; rural development; increasing productivity and competitiveness; restructuring or changes dues to federal standard, policies or cutbacks; or expansion of veteran owned businesses. The income from 504 loans are required to be used for purchasing of land and improvements, construction to existing land and improvements or the purchasing of long-term machinery and equipment. Usually, the assets being financed are used as collateral on the loan, along with the personal guaranties of the principal business owners. The 504 Loan Program is not to be used for working capital or inventory, debt repayment or refinancing. Interest rates are fixed to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Repayment terms are available in both 10 and 20 years. There are loan fees that apply - approximately 3% of the debenture. The fees can be included into the loan. With the economic development of a community and the success of small businesses closely tied, it is easy to understand why the SBA would work to encourage small businesses to participate in job growth and retention. Small business owners do not need to exist as large operations to qualify for this program. With long-term, fixed-rate financing available for major fixed assets, the 504 Loan Program can benefit both small businesses and their surrounding communities.