How an SBA 504 Loan Works for Your Business

SBA 504 loans offer a low down payment, a low fixed interest rate and are fully amortizing. 504 loans leave more working capital available to expand your business and allow you to build equity for your future. In addition, there are tax advantages to real estate ownership and a fixed-rate loan results in lower and predictable occupancy costs.

Advantages of the SBA 504

  • 90% financing preserves working capital
  • Below market interest rates
  • Longer repayment terms – reasonable monthly payments
  • Up to 40% reduction in real estate expenses by owning vs. leasing
  • Finance closing and other soft costs can be rolled into the loan
  • No balloon payments, calls or covenants
  • SBA 504 loans are assumable


Community Business Finance SBA 504 loans are financed through a unique public/private partnership that involves your business, Community Business Finance, and typically a bank or other private sector lender. In the 504 loan structure, your business puts up a minimum of 10% of the total funds for a project. (Single purpose type facilities could require up to an additional 5% down, and new or startup businesses another 5%.)
Community Business Finance provides up to 40% or $5 million ($5.5 million in certain circumstances), whichever is less. The private sector lender provides the balance of the financing. The Community Business Finance/SBA portion of the loan is at a fixed rate for a term of 10 or 20 years. The bank portion of the loan is at market rates and terms, negotiated between your small business and the bank.

Community Business Finance provides up to 40% of the total project cost with an affordable, fully amortized loan. The participating lender normally finances 50% of the cost. You, the borrower, typically puts down as little as 10% of the total project cost.*

 %Project CostSource of FundsInterest RateAmortizationCollateral
50%$1,000,000BankFixed or Variable15 to 30 years1st Trust Deed
40%$800,000Community Business FinanceFixed20 yrs Fully Amortized2nd Trust Deed
10%*$200,000Business Borrower

* Start-up OR Special Purpose Building requires 15% equity; Start-up AND Special Purpose Building require 20% equity.

The Community Business Finance/SBA portion of the financing is actually funded by the sale of a 100% federally-guaranteed debenture on the open market. The SBA 504 program is a take-out financing program. Community Business Finance/SBA offers an up-front commitment to finance a project. The participating private lender provides interim financing, advancing up to 90% of the total project funds during the construction/acquisition period.
After the project is complete, proceeds from the debenture sale reimburses or "takes out" the participating private lender (by the net debenture amount of the original SBA authorization).
Community Certified Development Corporation gives equal treatment and consideration in providing financial assistance to eligible Texas small businesses without regard to race, color, religion, sex, marital status, national origin, handicap or age.