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Certified development company

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A Certified Development Company is a non-profit organization that has been certified by the U.S. Small Business Administration (SBA) to provide financing to small businesses through the Certified Development Company Economic Development Loan Program also known as the SBA 504 loan program.

SBA 504 Loan Program

The US Small Business Administration 504 Loan or Certified Development Company or CDC/504 loan program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. As part of its mission to promote the development of businesses, the SBA offers a number of different loan programs tailored to specific capital needs of growing businesses. The maximum amount of the loan is $1 million (1.3 million in special circumstances), and if the borrower defaults, the private sector lender is paid off first, reducing the risk to the lender and encouraging loans.

The 504 program works by distributing the loan among three parties.

  • The business owner puts a minimum of 10%
  • A conventional lender (typically a bank) puts up 50%
  • A Certified Development Company (CDC) puts up the remaining 40%


To be eligible for a CDC/504 loan, the business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. Loans cannot be made to businesses engaged in speculation or investment in rental real estate.

How Funds May Be Used

Proceeds from 504 loans must be used for fixed asset projects, such as: *Purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; *Construction of new facilities or modernizing, renovating or converting existing facilities; *Purchasing long-term machinery and equipment. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

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