Step 1: The Initial Meeting

Small Businesses who think the 504 Loan sounds like it would meet their needs should contact Capital CDC at (800) 504-2232 or contact a specific area office to set up an initial meeting. The following items should be prepared for the initial meeting:


  • A description of the project
  • An estimate of the total project costs, including estimates on new construction, renovation, machinery, or equipment
  • A purchase agreement or an offer to purchase for any real estate involved in the project
  • Personal financial statements of all individuals with 20% or more ownership in the company
  • Product description and product literature. Be prepared to discuss its competition, the strengths and weaknesses of its product, its method of distribution, and the type of marketing it uses, future plans, and management
  • Financial statements of the company for the past three years, and an interim statement that is less than 90 days old

Step 2: Prepare Loan Application

Working with the small business and a private-sector lender, Capital CDC prepares the application package for the Small Business Administration (SBA).


How long will this take?

Once the required information is provided to Capital CDC, the loan application packaging process takes only 5-10 days.


Step 3: SBA Authorizes Your Project & Financing

The completed loan application package must be reviewed by the SBA. When they have approved the package, they will issue an Authorization approving the loan for funding.


How long will this take?

Depending on the current workload at SBA, an approval normally takes 3-7 business days.

This means that with a complete package, and the help of Capital CDC, a small business could see an SBA 504 loan packaged and approved in as little as 2-3 weeks!


Step 4: Interim Financing

Once the SBA has approved the loan, the private-sector lender will provide interim financing for the purchase or construction project, up to 90% of the total project costs.


Step 5: SBA Loan Closing

Once the purchase of assets has taken place, or new construction is complete, Capital CDC will meet with the small business to finalize the closing documentation necessary for funding the SBA portion of the loan. The final package goes through CDC legal review and is presented to the SBA for funding.


Step 6: SBA Funds the 504 Loan

Approximately 45 days after finalizing SBA closing documents, the 504 loan funds are provided to the private-sector lender. Once the funds are in place, the small business has a first mortgage loan with the private sector lender for approximately 50% of the project costs, and a second mortgage with Capital CDC/SBA for approximately 40% of the project costs.


Step 7: Servicing the 504 Loan

Capital CDC has overall servicing responsibility for the SBA 504 Loan. In the event of questions or any other type of request, the borrower or participating lender simply contacts the Capital CDC Portfolio Staff as the single point of contact. Capital CDC, in turn, follows up with the SBA for loan servicing actions or Colson Services Corporation for accounting questions. Colson receives all 504 payments, performs loan accounting functions and ensures that semi-annual payments are remitted to debenture holders.