The 504 loan program involves a partnership between a Certified Development Company (CDC), a private lender, and the borrower. Typically, the loan is structured with three parts:
A loan from a private lender covering up to 50% of the project cost. A loan from the CDC covering up to 40% of the project cost, backed by a 100% SBA guarantee. A down payment from the borrower covering at least 10% of the project cost.
This structure allows businesses to obtain financing with a lower down payment and favorable terms.