History of the Program
The Small Business Administration’s 504 Loan Program is a long-term financing tool for economic development within a community. The SBA 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land, buildings and large equipment. A Certified Development Company (CDC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs partner with the SBA and private-sector lenders to provide financing to small businesses. The Regional Development Company is a CDC for the State of Indiana.
The Regional Development Company is certified by the U.S. Small Business Administration to work directly with businesses in the State of Indiana in accessing the same capital markets as publicly traded companies. There is no cost to the taxpayer. Private investment firms sell pools of government-backed securities in the capital markets to fund the 504 loan program.
Contrary to the belief that the SBA is only for businesses that can’t secure financing elsewhere, the 504 loan program is designed to assist existing, healthy, creditworthy businesses. The credit requirements in this program mirror conventional underwriting practices of local lending institutions with one important difference: The business can leverage 90% financing and conserve valuable working capital to grow sales and expand their work force.