Capital CDC: Serving all of Texas and New Mexico

Capital CDC Services

Loan Program

Find out how the SBA 504 Loan Program assists small business owners.

Find a Development Officer

Find a business development officer that's on the ground where you are.

Interest Rates

See current and historical interest rates for SBA 504 loans.

Resources for Borrowers

Tools and testimonials to help borrowers understand the power of SBA 504.

For Lenders & Brokers

Capital CDC can help connect you with qualified and successful businesses.

Forms & FAQ

SBA 504 Loans are easy to apply for. Here are the forms to help you get started.

Benefits to Business

Faster turnaround time at SBA (typically 3-7 business days for Approval)
Close within 60 days after project completion
Capital CDC can provide a pre-qualification within days of receiving financial information
90% financing helps fill in gaps when conventional loans fall short
504 loans can be used to finance properties that are difficult for conventional lenders (convenience stores, restaurants, hotels)
Local contacts for the life of the loan to help with application, approval, closing & servicing

Benefits to Lender

Having a local partner to assist you in the transaction will free your time to source more business
90% financing helps fill in gaps when conventional loans fall short
Excellent, local customer service for your client will help you retain your portfolio
Strong collateral position with the Lender in 1st lien position, with 50% Loan-to-Value (LTV)
CRA credit is always awarded for participating in the 504 program

Benefits to Brokers

Quick turnaround enables closing in 60 days
90% financing helps fill in gaps when conventional loans fall short
The business owner keeps more working capital due to the favorable loan terms, low down payment, and fixed rate of interest
The lender gets a 50% LTV first lien on the building, resulting in a lower interest rate
The broker earns a commission on a deal that might not have worked with conventional financing
Neighborhoods benefit from additional jobs and increased economic development

Looking for a way to attract commercial clients?

Try the 504 Loan Program. Healthy businesses, which plan to invest in equipment or real estate for their own use, could qualify for attractive financing using the 504 Loan Program - in a way that can help you meet policy and regulatory guidelines.

Typical 504 Loan Structure
Source	Project Costs	Lien	Rate	Funding Limits	Term Real Estate	Term M&E
Bank	50%	1st	Market	No Limit	Min. 10 Years	Min. 7 Years
504 Loan	40%	2nd	Fixed	$50,000 - $1,500,000	20 Years	10 Years
Borrower	10%	-	-	-	-	-

Note: If a public policy goal is being met, the maximum 504 Loan amount increases to $2,000,000. For a small manufacturer, the 504 portion of the project can be as large as $4,000,000.

By partnering with Capital CDC, we make the process easy.

We work with you and your client to tailor a financing package that meets program guidelines and credit criteria of your client. We work directly with your client to package, process, close, and service the 504 loan.

The 504 Loan Program is utilized to finance existing, expanding and start-up businesses in conjunction with another lender (usually a bank). Capital CDC provides permanent take-out financing when the project is completed and the loan is closed in accordance with Capital CDC loan covenants and restrictions. Funding is arranged by Capital CDC issuing a 10 or 20 year bond that is sold to investors on Wall Street. These bonds are attractive to investors since they are fully guaranteed by the U.S. Treasury in the event a small business should default.

What’s the Lender’s Role?

The participating lender processes its loan as it would any loan request. Capital CDC and the lender can work together to collect documents from the borrower, and we can share our credit underwriting with the lender. The lender closes using its own loan documents.

Appraisals and environmental reports should be ordered naming all parties (the lender, Capital CDC and the SBA) with copies provided to us as received.

Generally, the lender provides “interim” or “bridge” financing. The 504 Loan is a permanent loan. During the construction or renovation period, the lender would provide the full 90% financing based on the 504 commitment.

When the 504 Loan is ready to close, the lender will be asked to provide copies of its loan documents, provide copies of its draw schedules (for construction or renovation projects), certify that there has been no adverse change in the borrower’s financial condition, and agree to provide 60 days notice of default/foreclosure proceedings.

504 Project Sizes

Project sizes typically range from $200,000 to $12,000,000 with the 504 Loan size ranging from $50,000 to $1,500,000 ($2,000,000 when public policy goals are achieved). For a small manufacturer, the 504 portion can be as large as $4,000,000. Three new public policy goals have been created to assist businesses willing to invest in “going green.” The following projects are now eligible for an increase in 504 financing: $2 million for sustainable design; $4 million for reduction of energy use by 10%; and $4 million for renewable energy or renewable fuels production. The first trust loan can exceed 50% of the project enabling larger companies to benefit from the 504 Loan.

The key advantages to the 504 Program for your financial institution:

You have first lien position with low loan-to-value, minimizing your collateral risk.
You make your own credit decision and use your own loan documentation.
There is no SBA paperwork for you to complete, yet you can comply with the Community Reinvestment Act (CRA).
You set your own rate and fees.
You keep a growing customer happy.
The community gets the advantage of keeping or attracting small businesses that create jobs.

Occupancy Requirements

Financing of:	Initial Occupancy	Occupancy + 10 Years
Existing Building	51%	51%
New Construction	60%	80%

In circumstances where a tenant will not vacate some or all of the space to be occupied by the small business, the 504 Loan can proceed to closing if there is no more than 1 year remaining on the lease.

Down Payment Requirements

Typically, the small business contributes 10% of the project costs. If the business is a start-up business (less than 2 years of operating history), the down payment increases to 15%. If the loan will finance a special or limited use asset, the down payment increases to 15%. If the project is for a special use asset being financed for a start-up business, the down payment increases to 20%.

Eligible Businesses

The applicant must be a for-profit business whose business net worth is less than $8.5 million and after tax income is $3 million or less on average for the last two years.

Eligible Projects and Project Costs

504 financing is used to acquire, construct, renovate or expand an owner occupied facility. It can also be used to acquire machinery and equipment with a useful life of at least 10 years.

In addition to the acquisition and construction costs, the “soft costs” (appraisals, environmental, construction interest, closing costs, etc.) may also be included in the total 504 project. This allows the business to preserve working capital that will be needed in the larger facility.

The SBA permits a limited amount of debt refinancing, under certain circumstances, as part of the 504 Loan program. Small businesses can refinance existing debt related to fixed assets if they also borrow money to finance more real estate or equipment through an expansion project. The amount of debt being refinanced must be 50% or less of the total cost of expansion.