CDC small business finance

Certified Development Companies or CDC's are private, nonprofit corporations that fuel economic growth and development by providing SBA loans to small businesses for community economic development. CDC's offer SBA-504 loans. These SBA-504 loans are required to be structured with three elements:

1. 10% of the project cost must come from personal equity from the business owner.
2. 50% of the project cost must come from a private sector lender. This is the first mortgage.
3. 40% of the project cost will be a second mortgage that is provided by CDC lenders, backed by the SBA. It will be 100% guaranteed.
In order to be eligible for these SBA loans, you have to have a business that operates for profit and fits the SBA size standards. The size standards vary by industry, and have recently changed, so check them on SBA.gov for the most current information. You can't have a tangible net worth over $7.5 million, and you can't average a net income over $2.5 million in the past two years. If you fit the qualifications you could be on your way to getting a CDC small business loan.

CDC small business loans are set up to encourage community growth and job growth. Thus, the qualifications for how much you can borrow have stipulations about job creation and retention based on your industry.

The largest SBA-504 lender is CDC Small Business Finance, which offers loans to small businesses in California, Arizona, and Nevada. Over the past 30 years, CDC Small Business Finance has provided over $8 billion in SBA-504 loans. As a result, they have created 100,000 plus jobs. These loans helped to fuel economic growth in addition to creating these hundreds of thousands of jobs.They are not the only company to offer CDC or SBA-504 loans.

CDC or SBA-504 loans are fixed-rate, long-term loans, which must be used to acquire major fixed assets. These fixed assets are to be used for expansion or modernization. These 504 loans can be used for small business offices and industrial space, equipment purchase, etc.

SBA 504 loans come in different amounts depending on goal you are fulfilling, and if you meet job creation requirements. For example, a maximum loan of $1.5 million requires that you met job creation criteria of one job created or retained for every $65,000 borrowed. If you are a manufacturer it is one job created for retained for every $100,000 borrowed. For a maximum loan of $2 million, you must meet a public policy goal such as business district revitalization, export expansion, minority business development, rural business development, etc. You can look at SBA.gov for the specific requirements needed for this amount of CDC/504 SBA loan. Small manufacturers can get CDC SBA loans for up to $4 million if classified in sector 31, 32, or 33 in the NAICS, and have all production facilities in the US.